Discount points mortgage Meaning and Definition

Pronunciation

(Not applicable) 🔊

Part of Speech

Noun phrase

Definition

A type of financial investment where the borrower pays a lender in the form of a discount on the loan’s interest rate, allowing the borrower to reduce their monthly payments.

Examples

• The couple opted for a discount points mortgage to reduce their monthly payments.
• The real estate agent explained the benefits of a discount points mortgage to the first-time homebuyer.

Synonyms

• Interest rate reduction
• Loan discount

Antonyms

• Interest rate increase
• Loan surcharge

Additional Information

Discount points mortgages are a popular option for borrowers who want to reduce their monthly payments. By paying a lump sum of money upfront, borrowers can reduce the interest rate on their loan, making their mortgage more affordable. The discount points are calculated as a percentage of the loan amount and are typically paid at the time of loan closing.

Disadvantages of discount points mortgages include the upfront cost and the potential for fees associated with the loan. However, for borrowers who plan to stay in their home long-term, a discount points mortgage can be a valuable investment.

Borrowers should consider their financial situation and loan options carefully before deciding to opt for a discount points mortgage. It’s also important to consult with a financial advisor or mortgage professional to determine whether this type of loan is a good fit for their individual circumstances.

Etymology

(Not applicable)

Usage Notes

Discount points mortgages are typically used in financial and real estate contexts. When using the term, it’s important to be specific about the loan terms and interest rates involved.

Cultural References

(Not applicable)

Idiomatic Expressions or Phrases

(Not applicable)

Related Words or Phrases

• Mortgage
• Loan
• Interest rate

Collocations

• Discount points mortgage rate
• Discount points mortgage calculator

Frequency of Use

Discount points mortgages are relatively uncommon, as they require a significant upfront investment. However, they can be a valuable option for borrowers who want to reduce their monthly payments over the life of the loan.