Question by Jes: Can anyone explain the points system in refinancing a mortgage?
I understand loan officers charge certain amount of points to do the loan, and i know a buyer can purchase discount points. But why do they have those points and why do they sometimes charge points out the back? and how does their amount of points help the Loan officers profit or commission?
i would really apreciate a response, thank you!
Answer by DakB
1 point is usually equal to 1% of the loan amount. That said I should tell you that one way or another the lender will get paid! either in points up front paid by the buyer or seller (negotiatble) or in adding up the interest rate instead. It’s all income to them. The loan officer has a “split with the company that they work with the same way a REALTOR has with their broker 1 point may mean that the loan officer or mortgage broker will get anywhere from 50-75 or higher percent of that number. In mortgages the splits are between broker and company. In real estate it is split 4 ways. Listing agent and office/Selling agent and office. So what we actually get paid varies by our split with the office as well. So much for getting paid well until you get smart enough to negotiate a better split for yourself. I always like to think that you should hire a REALTOR who can negotiate the best rate for themselves so that they do the same for you. See? Good luck with that and choose well with the Lenders..there’s a lot of stuff going on out there. Pick a known company.
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