What is a Point, or Discount Point?
A point, otherwise known as a discount point, is an upfront fee that lowers your annual interest rate. One point equals 1% of the total loan amount. Discount points can vary from 1% to 3.5% on a 30-year fixed loan. They are also known as “loan origination fees” or “premium fees.” Homeowners who are unsure of their long-term financial situation can choose to buy points to lower their interest rate.