Negative Points

Negative Points

Points paid by a lender for a loan with a rate above the rate on a zero point loan.

For example, a lender might quote the following prices: 8%/0 points, 7.5%/3 points, 8.75%/-2.5 points. Negative points, often referred to as “rebates,” are used to reduce a borrower's settlement costs. When negative points are retained by a mortgage broker, they are called a “yield spread premium.” See Points/Points and Rebates as Borrower Options.