What Are Mortgage Points

Mortgage points, aka discount points, are fees paid to a lender at closing in exchange for a reduced interest rate.

Also known as “buying down the rate,” which can lower your mortgage payment. One point costs 1 percent of your mortgage amount (or $1,000 for every $100,000).

Paying points to get a lower rate on a mortgage is often a losing proposition. Homeowners who do not stay in their homes long enough to recoup the up-front cost of paying points are on the losing end of this proposition.

You can and should review this with your real estate and your mortgage professional.