Points and Origination Fee
En español: Puntos y comisión de originación (points)
Points are fees charged as a percentage of the loan amount, paid at closing. One point is one percent. They may be an origination fee, the lender's charge for making the loan, or a discount paid to buy the interest rate down. Either way they are cash out at closing, before the property has earned anything.
- Compare loans on total cost over the actual hold, not on the rate. The rate is the headline; the points are the price of it.
- Origination and discount points are different things wearing the same name. Ask which one is being charged.
- They are usually financeable into the loan, which hides them in the balance and in the payment rather than removing them.
- Everything at closing is negotiable in a competitive quote, and points are the line lenders move first.
Two points on the same $1,012,000 loan, spread across a five-year term.
A rate bought down with points is only cheaper if the loan lives long enough to earn the points back. Sell or refinance early and the buyer of that rate paid twice.
Related terms
All termsLoan Constant
The loan constant is annual debt service divided by the loan amount, expressed as a percentage.
FinanceLTV (Loan-to-Value)
Loan-to-value is the loan amount divided by the property's value.
FinanceBridge Loan
A bridge loan is short-term financing for a property that cannot yet qualify for permanent debt: mid-renovation, mid-lease-up, or bought faster than a bank could move.
Terms arrive with the writing.
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