### Category Chong14968

This question is about “discount points”. Discount points are a fee paid directly to the lender at closing in exchange for a reduced interest rate. (Note that a point is 1% of the amount of the loan.) By paying additional “discount points”, you ca The primary purpose of buying discount points from the lender is to reduce your interest rate on your mortgage, and thus lower your monthly payment. You can pay points during the home-buying

## Called discount points by mortgage brokers and lenders, this tactic is like an upfront payment for a lower interest rate, and one point is 1% of the loan amount.

### You can lower the interest rate and monthly payments on your mortgage by One point costs you 1% of the loan balance, which you pay at the time of your

Calculate your payment and more. Buying mortgage points when you close can reduce the interest rate, which in turn reduces the monthly payment. But each point will cost 1 percent of your mortgage So how much does 1 point lower your interest rate? A good estimate is that 1 point lowers your interest rate around 0.25 percentage points, although it varies from lender to lender. On a \$250,000 loan, dropping from a 4.5% to a 4.25% interest rate yields savings of \$13,270.88 on a 30-year fixed-rate mortgage. Mortgage points are fees you pay the lender to reduce your interest rate. One point equals 1% of the mortgage amount. Typically, when you pay one discount point, the lender cuts the interest rate