Finance
What is 'points' in mortgage terminology and how does each point affect the loan in Illinois?
APoints are the monthly interest paid in advance; each point is one month's payment
BEach point equals 1% of the loan amount and is paid at closing to adjust the interest rate or cover lender fees✓ Correct
CPoints are the lender's credit score requirements; higher points mean stricter standards
DPoints are prepayment penalties calculated as a percentage of each payment
Explanation
Mortgage points are fees paid directly to the lender at closing. Each point equals 1% of the loan amount. Discount points are used to 'buy down' the interest rate (each point typically reduces the rate by about 0.25%). Origination points are fees for originating the loan. Both types are paid upfront and add to closing costs but may reduce the total cost of the loan over time.
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