How many points does a bank typically give on a conventional loan

Question

Hey everyone,

Does anyone know how many points I can expect to pay interest on a conventional bank loan?

Thanks

Russell Gronsky · Answer

Account Closed, It might make sense to pay the additional points to lower your interest rate, if you plan on holding the property for a long time. Usually, in order to make up the money you pay up front, it takes about 10 years of holding the note. And even then, the savings are small and since you have tenants paying the mortgage anyway, it further diminishes the benefit. I personally don't ever pay points on a loan from a bank for all the reasons above. To me, it makes little sense as I'd rather keep my cash right now to use towards repairs or for another deal.

And the short answer to your question is yes, when getting traditional bank financing, I recommend you only pay the typical interest but not any additional points.

Russell Gronsky · Answer

Account Closed if you are asking about the up-front points to close the loan...don't pay any! HML's charge points plus interest but they play in the space where banks normally don't so points are the norm here, especially in your first few deals with an HML. Banks on the other hand, will offer you the option to pay down your interest rate up front but it's usually not worth it unless you plan to hold the property for a VERY long time.

Jake S. · Answer

It all really depends on your qualifications and several other variables, but for a rental, its usually a point higher than standard rates