As part of our extensive line of brokerage deals, we at Lending Bee offer you—the homeowner or real estate purchaser—our mortgage loan points services. To be true, points in this context refer to an alternate type of fee that can be paid to us at closing. There are two types of loan points: Discount points and origination points. Each point is roughly equivalent to 1% of your loan amount, which translates to $1,000 for every $100,000 loan, $2,000 for every $200,000 loan, and so on.

Origination Points

Mortgage loan points basically differ depending on where they're applied. As its name suggests, origination points (also known as origination fees) are typically charged to recover the expenses of the loan origination process. In fact, Lending Bee's compensation is based on the amount of origination points you've accrued. At any rate, we're willing to negotiate whether you want to use your origination points in part or in whole depending on your circumstances or preferences.

Origination points are usually paid to Lending Bee in order to streamline the application process. This type of point-based payment scheme should be located at the top of a "good faith estimate" and must be unveiled within three hours after your loan application. Furthermore, they must also be disclosed on the final closing papers (otherwise known as HUD or HUD-1 Settlement Statement).

Moreover, origination points have one major difference when compared to their discount counterpart: More often than not, they are not tax deductible. Aside from this fact, there is no discernable advantage or disadvantage to paying in origination points instead of discount points. At any rate, origination points can sometimes be decreased or eliminated altogether when negotiating your mortgage loan. Feel free to ask our brokers and customer service assistants for more information about this particular fee.

Discount Points

Discount points are typically utilized to "purchase" a lower interest rate. This process is also known as a rate "buydown". These points help decrease the total interest rate for the entire term of a given loan. What's more, our brokers offer quite a lot of leeway when it comes to determining the buydown formula throughout the course of your loan negotiations.

Lending Bee's pricing also includes different levels of discount points. We offer options with no points, one point, two points, and so forth; we encourage all our customers to use the discount point scheme because the more points you're willing to pay, the lower your mortgage's final interest rate will be.

In any case, the real claim to fame that the discount points system has is the fact that it's tax deductible. Schedule A of your IRS 1040 tax return usually deducts the tax out of your discount points. Just be warned that if you don't enumerate your deductions (by acquiring the Standard Deduction) for other tax-related reasons, you may not be able to subtract the points' costs when filing your tax returns. Consult your tax advisor for more details on how to qualify for this payment system's special feature.