Three options available on most mortgages

Part 3: Finding the right home loan

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(This is Part 3 of a seven-part series. See Part 1: Mortgage shopping: what you should know before you begin; Part 2: Pros and cons of fixed, adjustable mortgages; Part 4: How long should you take to pay off your mortgage? Part 5: Investment returns influence real estate down payment; Part 6: Understanding choices in mortgage insurance and Part 7: Navigating real estate loan locks, docs.) This is the third article of a series on the decisions mortgage borrowers should make prior to entering the market. Last week's article was about selecting the best type of mortgage. This article is about three options that are available on most mortgages: whether to pay points, to waive escrows, and to accept a prepayment penalty. Paying points: Points are fees the borrower pays the lender at the time the loan is closed, expressed as a percent of the loan. On a $100,000 loan, two points is $2,000. Points are traded off against the interest rate. For example, on Sept. 7, 2005, one lender of...