What
are points?
Points are
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
the loan).
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 upfront).
Lenders may express other loanrelated 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).
