What Are Mortgage Points?
Mortgage points, also called discount points, are fees paid to a lender at closing in exchange for a lower interest rate. One point usually costs 1% of the loan amount. The rate reduction per point varies by lender and market conditions.
Break-Even Period
Months to break even = cost of points ÷ monthly payment savings. If the loan is kept longer than this period, the lower rate recovers the upfront cost.
Points vs. Origination Fees
Discount points buy a lower rate; origination points are a fee for processing the loan and do not lower the rate.
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🔗 Related Terms
More Home Buying Terms
- Adjustable-Rate Mortgage (ARM)
- Appraisal Gap
- Assessed Value
- Bridge Loan
- Cash-Out Refinance
- Closing Disclosure
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Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.