What do point costs mean on a mortgage?

[Scarpozzi]

I took a finance class a few years back, but I slept through it. Anyone, anyone?

 

[JC]

One point=one percent of the loan amount. Usually paid to get a lower rate.

 

[Scarpozzi]

That's what I thought. My next question: Would it be possible to get a loan from a bank to cover not only a house, but the closing costs as well? I've got a great job, but not a lot of savings right now due to my slacking wages and a desire to live life to its fullest.

 

[Scarpozzi]

Here's what I prequalified for on fha.com for $100,000
I'm 22 so I'm looking for a starter home with a garage.

Rate Points Point Cost P/I APR
5.000 4.000 $4000.00 $536.82 6.220%
5.125 3.375 $3375.00 $544.49 6.290%
5.250 2.750 $2750.00 $552.20 6.360%
5.375 2.375 $2375.00 $559.97 6.460%
5.390 2.250 $2250.00 $560.91 6.460%
5.420 2.000 $2000.00 $562.78 6.470%
5.440 1.875 $1875.00 $564.03 6.470%
5.500 1.375 $1375.00 $567.79 6.490%
5.530 1.250 $1250.00 $569.67 6.500%
5.580 1.000 $1000.00 $572.82 6.540%
5.600 0.875 $875.00 $574.08 6.540%
5.625 0.750 $750.00 $575.66 6.560%
5.710 0.500 $500.00 $581.03 6.630%
5.750 0.375 $375.00 $583.57 6.650%
5.790 0.250 $250.00 $586.12 6.680%
5.875 0.000 $0.00 $591.54 6.750%
5.940 -0.250 $-250.00 $595.70 6.790%
6.000 -0.500 $-500.00 $599.55 6.830%
6.125 -1.000 $-1000.00 $607.61 6.910%
6.250 -1.125 $-1125.00 $615.72 7.030%
6.375 -1.250 $-1250.00 $623.87 7.150%
6.500 -1.625 $-1625.00 $632.07 7.240%
6.625 -2.000 $-2000.00 $640.31 7.340%
6.750 -2.250 $-2250.00 $648.60 7.440%
6.875 -2.500 $-2500.00 $656.93 7.540%
7.000 -2.625 $-2625.00 $665.30 7.660%
7.125 -2.750 $-2750.00 $673.72 7.780%
7.250 -3.000 $-3000.00 $682.18 7.880%

 

[JC]

Sure, when I refinanced the closing costs were put into the new mortgage.

Balance the cost of those (if any) points against how long you plan to live in the house, i.e. will you recover the cost during your ownership.

 

[RBlount]

Originally posted by: Scarpozzi
That's what I thought. My next question: Would it be possible to get a loan from a bank to cover not only a house, but the closing costs as well? I've got a great job, but not a lot of savings right now due to my slacking wages and a desire to live life to its fullest.

Talk to a mortgage broker about 103% mortgage. They do exist, but often at a higher interest rate.

 

[NogginBoink]

Originally posted by: Scarpozzi
That's what I thought. My next question: Would it be possible to get a loan from a bank to cover not only a house, but the closing costs as well? I've got a great job, but not a lot of savings right now due to my slacking wages and a desire to live life to its fullest.

Yes, but expect to pay more interest.

You'll also have to pay PMI until you get 80% loan-to-value.