Mortgage Points

Definition

Upfront payments to the lender that reduce your interest rate, banking on the assumption you'll keep the loan long enough to break even.

Example Usage

We paid 1.5 points ($4,500) to reduce our rate from 4.5% to 4.25%, which would save us about $200 monthly.

Origin

From the financial term 'basis point,' though real estate points equal 1% of the loan amount

Fun Fact

Mortgage points are tax-deductible, which is one of the only ways regular homeowners can deduct interest.

Source: Mortgage financing terminology

Related Terms

Advanced

boot

Additional cash or property value included in a 1031 exchange to equalize the values being swapped, which unfortunately becomes taxable income. Named perfectly for something that kicks you right in the tax deferral strategy.

🏠 Real Estate

Advanced

ground lease

A long-term lease (often 99 years) where the tenant owns the building but rents the land beneath it, common for commercial properties and some condominiums. It's the real estate equivalent of building your castle on someone else's sand.

🏠 Real Estate

Advanced

lis pendens

A public notice that legal action affecting a property's title has been filed, essentially a warning sign that there's drama ahead. Latin for 'suit pending' and headaches imminent.

🏠 Real Estate

Advanced

non-conforming loan

Any mortgage that doesn't meet Fannie Mae or Freddie Mac guidelines, whether due to size, property type, or borrower qualifications. It's the misfit toy of lending, typically more expensive and harder to get.

🏠 Real Estate

Intermediate

prescriptive

A bossy word meaning based on rules or standards rather than what actually happens. In real estate law, it's the difference between 'this is how things should be done' versus 'this is how they're actually done'—very important for property rights and zoning regulations.

🏠 Real Estate

Advanced

sub2

Short for 'subject to'—acquiring a property while leaving the existing mortgage in place and making payments on behalf of the seller. It's a creative financing technique that makes attorneys nervous and investors wealthy.

🏠 Real Estate

Translate This Term

See “Mortgage Points” in Corporate Speak, Gen-Z Slang, Pirate Speak, and more.

Try the Translator

Share This Term

Post on X Share on Facebook Share on LinkedIn

Discover a Term

Beginner

LFK

Since most people aren't familiar with LFK or Kompete, LFK is a niche acronym that mostly Kompetegamersuse. Typically, g...