Quote NO LOL, "#1 is incorrect. A point of a loan amount based on commission values is worth .0001 times the loan amount which will equal your dollar amount valued. It’s based on a 100 scale. Many Loan Originators make 80 points which is equal to .008 times loan amount. If you are talking about 1 to 1.5 points that is .0001 to .00015 times loan amount. "
Uh....NO. NOTHING I stated is incorrect.
You are confusing a "basis point" such as used by the Federal Reserve in setting interest rates, with a "commission POINT" which is ALWAYS 1% of the loan, NOT .0001 or 1/100th of a percent.
"A point is a fee equal to 1 percent of the mortgage amount. "
1 percent = .01 of any value (that's from MATH 101. The word "percent" means to normalize to "hundreds" or 1/100th of any value, set of objects, etc It's a way to compare or "normalize comparing" a different set of data or items via making them all relative to 100 units of measure)
END OF STORY.
I pointed out CORRECTLY, that for large commercial loans versus mortgage type typical "home loans" it's often customary for the broker to receive more like a fraction of a point as in 1/2 a point approx. Aka .005, or ONE HALF OF ONE PERCENT.
I've originated enough loans to know what the hell I'm talking about. A POINT in terms of "loan broker commission" parlance is (and ALWAYS HAS BEEN) ONE PERCENT, a "basis point" commonly used in "interest rate" parlance (such as the Federal Reserve often uses) is a 1/100th of a percent or .0001.
CALL ANY BANK (Citi, Wells Fargo, B of A, etc) or ANY LOCAL CREDIT UNION and ask them what is "ONE POINT COMMISSION ON A MORTGAGE" as of today. It will be ONE PERCENT or $1000 for every $100,000 borrowed.
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