A Pointer on Points

Abstract

Residential mortgages today are offered to homeowners in a large variety of structures. A borrower can choose among different maturities, with 15and 30-year mortgages being the most popular. The interest rate can be fixed, adjustable or a combination of the two as in the hybrid 30-year adjustable rate products that have a fixed rate for the first five years. A third variable is the amortization of principal, which can be conventional or involve a balloon payment. An extreme example of the latter is the interest only loan (for the first five or 10 years).