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Original Issue Discount (OID) is a type of interest that is not payable as it accrues. OID is normally created when a debt , usually a bond , is issued at a discount . In effect, selling a bond at a discount converts stated principal into a return on investment, or interest.
In this example, the borrower bought two discount points costing 1 percent of the loan principal, or $3,200 each. By buying two points for $6,400 upfront, the borrower’s interest rate shrank to ...
For example, an origination fee of 5% on a $10,000 loan is $500. [ 2 ] [ 4 ] In the United States, Discount points are used to buy down the interest rates , temporarily or permanently. Origination fees and discount points are both items listed under lender-charges on the HUD-1 Settlement Statement .
The expense that includes the loan’s interest rate and any additional fees charged as part of the loan, such as origination fees. ... Discount points. 2 ($6,000) 1 ($3,000) 0. Points and fees ...
Other costs include title fees and a credit check fee. In addition, if you’ve decided to pay the mortgage lender to lower the interest rate on your mortgage, you’ll need to pay this discount ...
Discount points are always used to buy down the interest rates, while origination fees sometimes are fees the lender charges for the loan or sometimes just another name for buying down the interest rate. Origination fee and discount points are both items listed under lender-charges on the HUD-1 Settlement Statement.
Purchasing mortgage points allows you to "buy down" the interest rate on a home loan. Doing so may result in a lower monthly mortgage payment and save you money on interest charges over the long term.
This makes it easier to compare the charges a loan applicant receives on the good faith estimate to the HUD-1. 800 ITEMS PAYABLE IN CONNECTION WITH LOAN: 801 - Loan Origination Fee; This fee is a charge for originating or creating the loan 802 - Loan Discount
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