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Best Mortgage Rate, Refinance .com > Mortgage Refinancing > Discount Points When Refinancing Your Mortgage
Get Some Information About Discount Points To Help You Decide When You Refinance Your Mortgage
If you are thinking of refinancing your home mortgage then is very important to know what discount points are and how they affect the cost of your mortgage.
One discount point is equal to one percent of your loan amount.
A discount point is sometimes reffered to as an "origination fee" or a "point".
A discount point is a fee for establishing a new loan.
It is one of the important factors in the calculation of the annual percentage rate for a mortgage. One point is one percent of the loan amount.
The fee usually varies from .5% (half a point) to 2% (two points) of the loan amount, depending whether the loan was originated in the prime or the subprime market.
When you refinance your mortgage it would be very nice if you can refinance with a prime rate.
What is prime rate?
When you refinance your mortgage with a prime rate that means the bank or delay and are will charge or an interest rate based on the fact that you have good credit and you are considered creditworthy.
This is why it’s important for you to have good credit before you refinance your mortgage because if you don’t you fall in the subprime category.
What is subprime?
If you get a subprime rate for a new mortgage when you were finance this means that you have blemishes on your credit or you have unlimited credit history.
In other words you get a subprime rate because your credit is not good enough to qualify you for prime rate.
In plain English you end up paying more interest on your new mortgage than the Seattle credit before you refinance.
Conclusion: clean your credit first then refinance your house
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