Home Purchase Mortgage Calculators
Mortgage Program Calculators
In short, a lender cannot make you pay discount points. Paying discount points is completely optional for the borrower and if you decide to pay them then your mortgage rate should be lower. A lender should never require you to pay discount points but if you pay discount points and your interest rate does not go down then this raises a significant issue.
It is important to highlight that there are different types of points when you get a mortgage. Sometimes lenders charge origination points to process your mortgage but paying these fees is not optional and does not lower your rate. You can attempt to negotiate lower origination points or work with a lender that does not charge them but ultimately the lender decides what fees they want to charge you to process your loan. It is up to you to decide if you want to work with that lender.
So returning to you original question, lenders cannot force you to pay discount points but you should confirm that the points you are being asked to pay are indeed discount points (which would lower your interest rate) and not origination points, which are processing fees charged by the lender.
If you have questions about the mortgage points you are being asked to pay, your first step is to contact your lender to resolve the issue. Hopefully a quick conversation can clear-up the discrepancy.
At this point, we want to emphasize that you should not sign loan documents until you are absolutely comfortable with the terms of your mortgage including your interest rate, closing costs and any points. It is not your responsibility to pay more costs so that the lender can make money on your loan. The lender is responsible for honoring the mortgage terms they committed to you when you selected them applied for the loan.
If you are not satisfied with the lender’s explanation and cannot resolve the matter, you should cancel, or rescind, your loan. You can cancel your mortgage anytime before you sign your loan documents and work with a different lender.
This option may be challenging because you are so close to closing your mortgage and completing your home purchase. In this scenario, the property seller would like have to agree to extend the escrow period so you could work with a different lender to complete your mortgage.
If you are considering changing lenders make sure that the new lender can process your mortgage fast enough to meet your closing timetable, which hopefully the property seller is willing to extend. You do not want to delay the home purchase process because you switched lenders, although changing lenders can save you thousands of dollars in closing costs or over your mortgage term.
If you are considering changing lenders, we recommend that you contact multiple lenders in the table below to understand if they offer superior mortgage terms and to determine if they can meet your closing timetable.
If switching lenders is not feasible and your current lender continues to act in bad faith, your other option is to file a complaint with your state attorney general or the Consumer Financial Protection Bureau (CFPB). Contacting a real estate attorney for legal advice is also another option to consider. I also recommend letting your current lender know that you intend to file complaints or are considering taking legal action as this may motivate them to do the right thing.