What are Mortgage Points?

Mortgage points, also known as discount points, are fees paid to a lender at closing in exchange for a lower interest rate on a mortgage loan. One mortgage point typically costs 1% of the total loan amount and can lower the interest rate by 0.25% to 0.375%, depending on the lender.

For example, if you're taking out a $300,000 mortgage loan and you pay one mortgage point at closing, you would pay a fee of $3,000 upfront. In exchange, the lender may reduce your interest rate from, say, 4.5% to 4.125%.

Paying mortgage points can be beneficial if you plan to keep the mortgage for a long time, as it can help you save money on interest over the life of the loan. However, it's important to do the math to determine if paying mortgage points makes sense for your specific financial situation.

I want to find out more about Mortgage Loan Points