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Mortgage Glossary

Points (Discount Points)

Mike Starr·Reviewed August 2026

Discount points are fees paid directly to the lender at closing in exchange for a lower interest rate. One point equals 1% of the loan amount. Paying points can reduce your monthly payment and total interest paid over the life of the loan. Points make sense if you plan to stay in the home long enough to recoup the upfront cost through lower monthly payments.