Finance
What is 'points' in a mortgage transaction and how do they affect the cost of a Nevada loan?
APoints are a flat fee charged by Nevada lenders for all loans
BOne point equals 1% of the loan amount; discount points are prepaid interest used to buy down the interest rate, while origination points compensate the lender for processing — each point paid typically reduces the rate by approximately 0.25%✓ Correct
CPoints are a Nevada state mortgage tax collected at closing
DPoints are only charged on jumbo loans in Nevada
Explanation
Mortgage points are percentages of the loan amount. Discount points are prepaid interest to lower the interest rate (typically 0.125-0.25% rate reduction per point). Origination points are lender compensation for making the loan. On a $400,000 Nevada loan, one point costs $4,000. Paying 2 discount points ($8,000) might reduce the rate from 7.0% to 6.5%, lowering monthly payments. Whether to pay points depends on break-even analysis — how long you keep the loan matters.
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