Pre-Payment Calculator Debt Consolidation Worksheet Documentation List Frequently Asked Questions 1. Escrow Accounts Private Mortgage Insurance 1. Private Mortgage Insurance is an insurance policy designed to make lenders more inclined to lending money to people with low downpayments. The good point about the self insured loan is that the extra interest charged is tax deductible whereas PMI is not.
Discount points are pre-paid interest paid by the borrower on a loan.
In most cases discount points are paid as an option for the borrower to get a lower note rate. An interest rate which has no discount points is known as a par rate. Generally it is best to pay discount points if you plan on holding the loan for at least 7-10 years. If you will probably pay off the loan in a shorter time than this it is usually best to take a par rate. It will generally take a few years to make up the cost of the discount points.