Seller-Paid Points

AAA

DEFINITION of 'Seller-Paid Points'

Any points paid by the seller of a home for the buyer. Seller-paid points are always deducted by the purchaser of the home. These points are offered as a purchase incentive for the prospective buyer and can provide the buyer with a lower rate as a result.

INVESTOPEDIA EXPLAINS 'Seller-Paid Points'

Seller-paid points effectively reduce the basis of the home price for the buyer by the dollar amount of the points paid. Homebuyers who purchased their homes between January 1, 1991, and April 4, 1994, should reduce their basis only if they deducted the points as mortgage interest in the year of purchase. Buyers after this date must reduce their basis by points paid regardless of whether they deducted the points or not.

RELATED TERMS
  1. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  2. Points

    1. A 1% change in the face value of a bond or a debenture. 2. ...
  3. Itemized Deduction

    A deduction from a taxpayer's taxable adjusted gross income that ...
  4. Origination Points

    A type of fee borrowers pay to lenders or loan officers in order ...
  5. Mortgage Interest

    The interest charged on a loan used to purchase a residence. ...
  6. Commercial Real Estate Loan

    definition of a commercial real estate loan
Related Articles
  1. Mortgage Points: What's The Point?
    Credit & Loans

    Mortgage Points: What's The Point?

  2. Score A Cheap Mortgage
    Options & Futures

    Score A Cheap Mortgage

  3. Understanding The Mortgage Payment Structure
    Credit & Loans

    Understanding The Mortgage Payment Structure

  4. Learn How To Lower Your Second Mortgage ...
    Investing

    Learn How To Lower Your Second Mortgage ...

Hot Definitions
  1. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  2. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  3. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  4. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  5. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  6. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
Trading Center