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. Origination Points

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

    The interest charged on a loan used to purchase a residence. ...
  4. Points

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

    A deduction from a taxpayer's taxable adjusted gross income that ...
  6. Gentrification

    Gentrification refers to when a neighborhood or city undergoes ...
Related Articles
  1. Credit & Loans

    Mortgage Points: What's The Point?

    Learn how to pay less for your home in the long run, or save in the short run.
  2. Options & Futures

    Score A Cheap Mortgage

    Hidden costs can create what looks like a good deal. Find out how to find the best mortgage possible.
  3. Credit & Loans

    Understanding The Mortgage Payment Structure

    We explain the calculation and payment process as well as the amortization schedule of home loans.
  4. Credit & Loans

    Can You Get A Mortgage On A Mobile Home?

    You can get a loan for a mobile home, but it may not be a mortgage. These are the choices for funding manufactured housing.
  5. Economics

    What is Earnest Money?

    An earnest money deposit shows the seller that a buyer is serious about purchasing a property.
  6. Home & Auto

    Save $30,000 For A Home Down Payment In 5 Months

    Before tackling mortgage rates, home maintenance costs and utilities, every home buyer must first gather the funds for a mortgage loan down payment.
  7. Personal Finance

    Why These Could Be 2015's 10 Best REITs

    If you want to get on the REIT money train, then you better hurry up. However, the REITs covered here have potential beyond 2015.
  8. Investing

    Eyeing REITs? Consider these Risks

    REITs are a great way to invest in real estate without all the drama and headaches. That said, there are risks.
  9. Brokers

    How Real Estate Agent and Broker Fees Work

    Buying or selling a home? What you need to know about real estate agent and broker fees.
  10. Options & Futures

    Give Yourself More Options With Real Estate Options

    Real estate options have many benefits, including a smaller initial capital requirement.

You May Also Like

Hot Definitions
  1. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  2. Asset Class

    A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same ...
  3. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  4. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  5. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  6. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
Trading Center