When you’re shopping for home loans, the numbers can get overwhelming fast rates, fees,credits, points, closing costs all layered on top of one another.
At OnPointMortgage, LLC, we know that clarity leads to confidence, and we’re here to help you understand what you’re actually paying for when you buy or refinance a home.
Whether you’re considering a conventional loan, FHA mortgage, VA mortgage, or even a Non-QM loan, understanding mortgage points and closing costs can make a big difference in your long-term savings.
What Are Mortgage Points?
Mortgage points, sometimes called discount points, are essentially prepaid interest. You pay a small percentage of your loan amount upfront to get a lower interest rate, which means lower monthly payments over time.
Think of it like this: you’re buying down your rate now to save money later.
- One point = 1% of your loan amount.
- Paying one point might lower your rate by around 0.25%, though it varies depending on market conditions and loan type.
For example, if you’re taking out a $400,000 loan, one point would cost $4,000. In exchange, your rate might drop from 6.5% to 6.25%, saving you money every month.
Whether points make sense depends on how long you plan to keep your home or loan. If you’re staying put for several years, paying points can be a smart move. If you might sell or refinance soon, you may not recoup that upfront cost.
What Are Closing Costs?
Closing costs are the fees and expenses required to finalize your mortgage, whether it’s a purchase, cash-out refinance, or rate and term refinance.
These typically include:
- Lender fees (origination or underwriting)
- Title and escrow fees
- Appraisal and credit report fees
- Prepaid items, like property taxes and homeowner’s insurance
In general, closing costs run between 2%–5% of your loan amount, though they can vary depending on your loan program and location.
At OnPoint Mortgage, we’re transparent from day one no surprises at the closing table. We’ll walk you through every fee and explain your options for reducing costs, like using lender credits or negotiating seller concessions.
The Connection Between Points and Closing Costs
Here’s where many borrowers get tripped up: paying points is a closing cost. But unlike one-time fees that don’t benefit you long-term, points can actually save you money by reducing your rate over the life of your loan.
Some borrowers use a portion of their closing costs to buy points especially when locking in along-term conventional, FHA, or VA mortgage.Others prefer to minimize upfront costs and take a slightly higher rate instead.
It all depends on your goals, time horizon, and monthly budget something we specialize in helping clients evaluate.
What About Refinances and Specialty Loans?
The same principles apply when refinancing. Whether you’re doing a cash-out refinance to access equity or a no cash-out refinance to simply lower your rate, you’ll encounter both points and closing costs.
If your goal is to save on interest rates with OnPoint Mortgage, paying points can help you achieve that especially in a rate and term refinance designed to shorten your term or lower your payment.
And for borrowers looking beyond standard loan products, we offer flexible options:
- Construction loans and construction-to-permanent loans for building your dream home.
- Jumbo loans for high-value properties.
- HELOCs (Home Equity Lines of Credit) for flexible access to your home’s equity without refinancing your first mortgage.
No matter your situation, we take the time to explain every option so you can make an informed, confident decision.
How OnPoint Mortgage Helps You Plan Strategically
Our approach is simple: we educate first, advise second, and execute with precision. We’ll review your full financial picture, run side-by-side comparisons, and help you determine if paying points makes sense or if keeping cash in your pocket is the smarter play.
We’re also here to help you compare lenders, loan types, and long-term outcomes. If you’re still deciding between working with a broker or a bank, check out our post Broker vs Bank to learn how mortgage brokers often save borrowers time and money.
For current insights into today’s mortgage environment, our 2025 Market Trends post is a great place to start. And if you’re still wrapping your head around down payments, don’t miss our guide on Down Payment Myths.
Ready to Take the Next Step?
Whether you’re buying your first home, building your dream property, or refinancing to save money, OnPoint Mortgage makes the process clear, fast, and stress-free.
👉 Apply Now to get pre-approved in minutes, or Schedule your appointment today! for a one-on-one conversation with one of our experienced mortgage professionals.
We’ll help you understand every number, every option, and every opportunity so your mortgage truly works for you.
Visit us anytime at OnPointMortgageLLC.com to learn more.
