Mortgage points are upfront costs that can affect the interest rate and total cost of the loan. One discount point commonly equals 1% of the loan amount.
Discount points
Discount points usually mean paying more at closing in exchange for a lower interest rate. Whether that helps depends on how much the rate drops and how long you keep the loan.
Lender credits
Lender credits work in the opposite direction: you may accept a higher rate in exchange for lower upfront costs.
Break-even thinking
Compare the upfront cost with the monthly savings. If points cost $3,000 and save $75 per month, the simple break-even point is 40 months.
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