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Points, as defined, are fees that lenders or creditors use in order to pull down interest rates that they impose on loans taken out by borrowers. In the loan process, this usually is characterized to be a confusing factor for the borrower. Points are not advantageous to the part of the borrower. On the contrary, it is more beneficial to the part of the creditor.

Points is basically the term used to refer to the fees you will have to pay when you are taking out a loan. Points are often referred to as discount fees, loan-original fees or buy-down fees. One point is equivalent to 1% of the amount you are borrowing. So let’s say you are taking out a $100,000 mortgage. One point would be equivalent to 1% of $100,000, which is $1,000.

Now, the lender is charging you 5% interest rate on the mortgage. Suppose you gain 2 points. This is equivalent to 2% of the loan amount and 2% off the interest rate. In this example, that’s $2,000. This means if you pay the lender $2,000 up front, the remaining balance on your loan will only be charged 3% instead of 5%. Basically, the more points you pay on the loan upfront, the lower the interest rate your lender will charge you on a loan.

Points can be advantageous in one instance. One example is when you are buying a newly built house. There are times that the house developer would offer to pay for the points on a loan. If your developer or builder offers to pay for the points on a loan, this can provide you relief; this actually helps you save money off your loan.

There are instances when points are advantageous and not advantageous. It is to your advantage if someone else offers to pay the points for you. It isn’t a good idea if you end up having to pay the fee for the points yourself.

James Williams is a former small business owner. He specializes in business management, trading, real estate and finance. For more information on loans and finance visit http://lendersandfinancing.com/

The Internet is an excellent resource for mortgage refinancing; however, online mortgage companies are just as likely to take advantage of you as any traditional brick and mortar company. Many online mortgage sites claim there are not fees for using their services, then turn around and charge you as much as $1,300 just entering your name and address into a form. Here are several tips to help you avoid becoming a victim to this scam when mortgage refinancing.

When mortgage refinancing on the internet there are several types of companies you will encounter. The first type of mortgage site you need to be aware of is what’s known as an “Internet List Broker.” These are mortgage sites such as GoApply.com that really have nothing to do with mortgage loans whatsoever. They put up a flashy website with a contact form and lure unsuspecting homeowners into entering their contact information. These “list broker” websites build a list of contact information and turn around and sell it to mortgage companies and brokers.

The next type of Mortgage Company is a mortgage broker-bank. Broker-banks operate on the Internet as mortgage brokers with one important distinction. Because they fund the mortgage with their own money and close on the mortgage in the name of their company instead of a wholesale mortgage lender, they are exempt from the Real Estate Settlement Procedures Act (RESPA). The disclosure laws found in the RESPA protect homeowners from abusive lenders, and thanks to the banking lobby Internet sites like eloan.com are exempt from disclosure laws. Never take out a mortgage loan from a lender that doesn’t have to play by the rules.

The last type of Mortgage Company you will encounter is the retail branch or a wholesale mortgage lender, bank, or broker. One example of a mortgage broker you will encounter online is Lending Tree. Lending Tree claims there is no fee for using their services; however, the fine print found in their licenses and disclosure statement paints an entirely different picture. If you fill out Lending Tree’s form with your contact information and take out a mortgage loan from a lender in their network you will pay a “computerized loan origination fee” to Lending Tree of $1,300. How do mortgage websites like Lending Tree get away with lying to their customers? All of the fees are disclosed in their licenses and disclosure statements; however, very few homeowners actually read the fine print.

You can learn more about mortgage refinancing online without overpaying for your loan with a free, six-part mortgage tutorial.

To get your FREE six-part Mortgage Refinancing Tutorial, visit RefiAdvisor.com using the link below.

Louie Latour specializes in showing homeowners how to avoid costly mortgage mistakes and predatory lenders. To get your hands on this free video tutorial: “Mortgage Refinancing – What You Need to Know,” which teaches strategies for finding the best mortgage and saving thousands of dollars in the process, visit Refiadvisor.com.

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