What is Discount Points?
Upfront fees to lower your rate. 1 point = 1% of loan amount = ~0.25% rate reduction. Worth it if keeping loan past break-even point.
Discount points are upfront fees paid to the lender at closing to reduce your interest rate. One point equals 1% of the loan amount and typically lowers the rate by 0.25%. For example, on a $300,000 loan, one point costs $3,000. Points make sense if you'll keep the loan long enough for monthly savings to exceed the upfront cost (break-even calculation).