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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 $97.99,
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 -2012 Advantage Software LLC |
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