Financial
Basis Points
A unit of measurement equal to one-hundredth of a percentage point (0.01%). Mortgage rates are often discussed in basis points because small differences matter over the life of a loan. For example, 50 basis points equals 0.50%. On a $300,000 loan, a difference of 25 basis points in interest rate changes your monthly payment by roughly $45 and costs or saves thousands over 30 years.
Why It Matters
Basis Points directly affects how much you pay for your home and how you build wealth through homeownership. Understanding the financial mechanics of your mortgage helps you make choices that save money over the long term.
Use mortgage calculators to see how basis points impacts your specific numbers. Even small differences in financial terms can add up to tens of thousands of dollars over the life of a 30-year mortgage.