What are mortgage (origination) points?

Aqua Air Enterprises
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Jan 15, 2009 by Aqua Air Enterprises
Category: Home Loans

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Bogie Boric
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Advisor: Bogie Boric, Tax Planning
Jan 15, 2009  
Points are an up-front fee you pay for obtaining a mortgage. Each point equals 1% of your loan amount. For example, a $300,000 mortgage with 1 points, means you have to pay $3,000. Some lenders add origination points into their quoted points while other lenders add an origination point in addition to their quoted points. You can get a no point mortgage if you are short of cash, but then the interest rate will be higher. Or you can pay more points to get a lower interest rate, which might make sense if you are planning on keeping your home for a long time.



Your origination fee (points), when buying a home or refinancing, are generally deductible on Schedule A form of your tax return. This is also the case with your mortgage interest.