Loan Costs vs Points

[James Blalock]

Does anyone have a good explanation about the difference between Loan Costs and Points? I started the loan process with Wells Fargo for a loan at 4.625 % for an investment property and recently I had someone state that the rate seemed a little high.  As a result I made a call to Quicken Loans to see if I could get a better rate. They said that they could do a loan for around 4%. The difference between the two quotes was about $33.00 per month in the mortgage payments. What confused me was that Quicken Loans included points and Wells Fargo didn't.  When I asked about points with the Wells Fargo loan officer, I was told that there were no points charged.  However, the paperwork that I signed did have "Loan Costs" which to me, equals points.  Is there a difference? 

[Chris Mason]

@James Blalock, 

There's a little dial you can turn to the right, or to the left.

• If you turn it to the right, you're paying more up-front for a lower rate.
• If you turn it to the left, you're paying less up-front for a higher rate. 
• Every lender has that exact same dial.

It rarely makes sense to turn that dial to the extreme in either direction. 

• Middle aged folks buying a home that they are 100% certain they will grow old and die in, that they will never refinance, OK let's turn it pretty far to the right. I've got someone in escrow right now paying $17k (!!!) for a screaming rate with a 14 year break-even because they are 100% certain that this is the home they will die in (I tried to calm them down, I personally disagree with this, but they insisted and ultimately The Consumer is Boss).
• Flippers who are only going to own the place for a few months, let's turn it all the way to the left. Smart flippers be like "hey Chris, what is the HIGHEST interest rate appearing on your rate sheet? Do you have off-sheet pricing? Can you increase the interest rate more for a bigger lender credit?"
• Most people aren't in either situation, so moderation is best.