What are mortgage points and why do you have to pay them? Points are an American thing, in other countries they do not have to pay points on their mortgages. These points however are simple to understand, they are simply extra fees that have to be paid when the loan is finally closed.  If you are paying two points on a $100,00 loan then you are paying an extra $2,000. You are going to find that points are always shown by a percentage of the loan. These points are just what you are paying the lender in order for them to lend you the money that you need so much to buy your home. As mentioned above points are only an American thing, why, who knows, but unfortunately they have to be dealt with. They are just part of the mortgage world that we have to put up with. Well, that is not exactly true, you ca ask your lender if they are willing to give you a no point loan. There are lenders who will do this, all you have to do is ask. Your interest rate may be higher however so make sure that you find out which way you would save the most money. No matter what you see advertised, how good or bad the terms sound you have to realize that you will always find different quotes once you get into the office of the lender. They have all kinds of deals in their desk that they might just be willing to pull out for you. Haggle with your lender, do not just accept whatever they throw out at you. You will be able to find all sorts of different rate and point combinations. You might even be able to find lenders who are willing to offer you negative points on higher rates. If you get these you are actually getting a rebate. While points make the mortgage situation more complicated they do add some flexibility to the mortgages as well. The trick is to find the right combination of point and rate for you. If you do not have much money at the time of your loan you will probably have to get a no point loan since you will not have the money available to close the deal otherwise. If you do have some cash flow available to you and if you do have a decent income coming in then you will want to look for two things in your mortgage. If you are not thinking of a quick turnover and you plan on having a longer term for your mortgage you will find that it is a good idea to go with the point system. You will have to pay more up front but over time you will save money on your lower interest rate. There is one other important factor that you need to take into consideration and that is your opportunity cost. If you were to save the money that you would otherwise have spent on points what can you do with this cash?  Could you use it to make more money than you would be saving by paying points? Perhaps. If you are a shrewd investor you could put your money to work for you and it could double or even triple. What you need to do is take some time to figure out how much each factor will save you and cost you.