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| Loan Points
/ Loan Origination Fees / Discount Fees |
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Loan points are also known as loan origination fees and loan
discounts. Loan Points are a fee charged to a borrower by lending
institutions for the privilege of obtaining a loan. Lending
institutions use loan origination fees to generate income via
lending activities. Each point is equivalent to one percent of
the amount borrowed. Loan origination fees are usually paid up
front in cash when you obtain a loan or mortgage. As a
borrower, you should shop around to obtain the best deal, that is,
the lowest interest rate with the least number of loan points.
If you do not wish to pay upfront points, you can often obtain a
loan with no loan origination fees. The following factors can
affect the number of points paid on a loan. During periods of
time when there is a large demand for loans, lenders may increase
the number of points paid to obtain a loan or mortgage. The
amount of risk associated with the loan is another factor.
Generally, the greater the risk to the lender, the larger the loan
origination fees and the higher the loan interest rate. |
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Loan points paid to purchase a home are deductible. If you are
refinancing a home, the loan origination fees must be deducted over
the term of the mortgage. For income properties, you must
deduct points over the term of the mortgage also. For example,
you obtain a 20 year mortgage for $100,000 and pay 1 point.
To obtain the loan, you are required to pay 1 point or $1,000 up
front. You are allowed to deduct 1/20th of this amount each
year or $50. If you pay off the balance of the mortgage early,
you can deduct all unused points in that year.
The On Target
real estate investment software applies your loan point deductions
on the Income Statement. You can enter up to 3 loans with
origination fees and On Target takes care of the financial detail
for you. If you are using a calculator to make important
investment decisions, its time to do things the easy way. Just
enter the property's financial detail and let On Target do the
arithmetic. On Target makes thousands of calculations in
seconds and takes all of the work out of analyzing an income
producing property. If you would like to allow On Target do those
cumbersome calculations for just $97.95, click on
Purchase
Software
To learn more about this time saving analysis software, click on
Software
Features The On Target real estate
investment software includes a 30 day money back guarantee and free
support.
© Copyright 2000 -2010 Advantage Software LLC |
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