Mortgage Points Explained: The Hidden Costs Lenders Don’t Want You to Notice
Thursday, May 22, 2025
🏠 Homebuyer 101: The Truth About Points (And How Lenders Use Them Against You)
This week, we’re going back to basics—but with a twist most loan officers won’t tell you.
Because here’s what I’m seeing right now:
Lenders charging borrowers points just because they can.
No logic. No explanation. Just hidden costs buried in the fine print.
📉 The Reddit Loan That Made Me Gasp
Someone posted a loan estimate showing a 4.5% rate.
Sounds amazing, right?
Until you scroll down and see the real headline:
7.5 points
(That’s $30,000 on a $400,000 loan.)
And just like that, the “amazing” rate turns into highway robbery.
💡 What Is a Point?
Here’s what you need to know:
1 point = 1% of your loan amount
$400,000 loan = $4,000 per point
Two types:
🧾 Origination Points:
That’s the lender charging you to do the loan.
Common with big VA call centers. One point = $4K.
🔻 Discount Points:
Used to “buy down” your rate—but not all points buy equally.
Some might get you a 0.25% rate drop. Others barely budge the needle.
🚨 The Dirty Trick You Have to Watch For
Most people get trapped because they ask the wrong question:
“Can you get me the lowest rate?”
Answer: Sure… for $20,000 in points.
But you won’t hear about that part until it’s too late.
Worse—some lenders won’t tell you at all unless you know to ask.
And by closing time, it’s locked, baked in, and painful.
🧠 What Smart Borrowers Do Instead
1.) Ask for the full cost of the rate.
Don’t stop at the number—ask: “How many points does that rate cost me?”
2.) Demand transparency.
If a lender dodges your questions or sends vague answers, walk away.
3.) Look up the loan officer.
Not just the company. Not the one your agent recommended. The individual.
4.) Don’t assume every point buys down the same amount.
It changes daily. By lender. And some make it deliberately confusing.
5.) Be skeptical of “ultra-low” rates.
If it sounds too good to be true, it probably involves seven points and a prayer.
🔍 Bottom Line
Points aren’t bad. But you need to know:
✔️ What kind of point it is.
✔️ How much it costs.
✔️ What you’re getting in return.
If someone offers you 5% but it costs $20K to get it…
That’s not a deal. That’s a trap.
💬 Got Questions About Your Loan?
Thinking about buying or refinancing and want a second set of eyes?
Feel like someone’s quoting you a unicorn rate?
Text me directly at 📱 615.955.0461.
I’ll give you the truth—no fluff, no pressure, no sales pitch.
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