Updated over 8 years ago on . Most recent reply
What the heck are points
I have lots of construction experience but I am looking to get into flipping. I have a great connection for the money but I keep hearing people talking about paying back one or two points etc. What in the world are they talking about? Thanks
Most Popular Reply
Brent Edwards
A point is just 1% of the sales price.
It's basically paying interest up front at closing. Trade off of interest paid over the life of the loan versus up front at closing.
So, even with buying your primary residence, you can lower your interest rate by paying points up front.
Some people prefer to pay over time versus paying more money at closing, so they will go with a regular interest rate an zero points.
When working with private or hard money lenders, the loans tend to be rather short term 6 months to 12 months, sometimes longer. So, the lenders usually ask for points upfront to make their money.