Discount Points
Also known as Points, Mortgage Points
Optional upfront fees you pay at closing to permanently lower your mortgage interest rate.
In plain English
One discount point typically costs 1% of your loan amount and lowers your interest rate by roughly 0.25%, though the exact tradeoff varies by lender. It's a way to trade upfront cash for a lower rate over the life of the loan.
Points are worth it if you'll keep the loan long enough to recoup the upfront cost through lower payments — ask your lender for the specific break-even point.
Where you'll run into it
Guides and tools on TheBuyingPath that cover discount points in context.
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