What “98” or “97” means

Sometimes lenders say a mortgage is “going at 98” or “97.”This means:The lender only gives 98% or 97% of the loan amountThe missing 2% or 3% is paid upfrontThis is the same as charging 2 or 3 discount pointsDifferent wording — same result.Big idea to rememberPoints = more money upfront for the lenderEach point raises the lender’s real returnEffective yield shows what the lender truly earns A lender’s effective yield is the true interest rate they earn after adding the extra money paid upfront through discount points.