Points (Discount Points)
An upfront fee paid to a lender to lower your mortgage interest rate, with one point costing 1% of the loan.
What does points mean?
Each point typically buys down the rate by around 0.25%. Points pay off only if you keep the loan past the break-even point, where the monthly savings recoup the upfront cost.
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Related terms
Points — frequently asked
Are mortgage points worth buying?
Points pay off only if you keep the loan past the break-even point — the months it takes for the lower payment to recover the upfront cost. If you may move or refinance sooner, skip points; if you will stay long-term, they can save money.
How much does one mortgage point lower my rate?
One point costs 1% of the loan amount and typically cuts the rate by about 0.25%, though the exact amount varies by lender and market. Two points might drop a 7% rate to around 6.5%.