costs that need to be paid to a lender in
order to receive mortgage financing under
specified terms. A point is a percentage of
the loan amount (one point = one percent of
One point on a
$200,000 loan would
be $2,000. Discount points are fees that are
used to lower the interest rate on a mortgage
loan (you are discounting the interest rate by
paying some of this interest up-front).
Lenders may express other loan-related fees in
terms of points. Some lenders may express
their costs in terms of basis points
(hundredths of a percent). 100 basis points =
1 point (or 1 percent of the loan amount).