## What is a discount point on a mortgage?

A mortgage point – sometimes called a discount point – is a fee you pay to lower your interest rate on your home purchase or refinance. One discount point costs 1% of your home loan amount. For example, if you take out a mortgage for $100,000, one point will cost you $1,000.

## What are points on a mortgage?

The term points is used to describe certain charges paid to obtain a home mortgage. Points may also be called loan origination fees, maximum loan charges, loan discount, or discount points. Points are prepaid interest and may be deductible as home mortgage interest, if you itemize deductions on Schedule A (Form 1040), Itemized Deductions.

## What are origination points in a mortgage?

In both cases, each point is typically equal to 1% of the total amount mortgaged. On a $300,000 home loan, for example, one point is equal to $3,000. Origination points are used to compensate loan officers. Not all mortgage providers require the payment of origination points, and those that do are often willing to negotiate the fee.

## Should I pay points on my investment property loan?

Before a loan is finalized for your investment property, there are a few details related to "points" that need to be worked out. Overall, paying points or not on your loan depends upon how long you’re going to keep the property and the mortgage on that property.