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 $100,000 loan would be
$1,000. 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).
