Upfront fees paid at closing to reduce the interest rate — each point typically costs 1% of the loan and lowers the rate by roughly 0.25%.
Points make sense only if you keep the loan long enough for the monthly savings to repay the upfront cost — the same break-even logic as refinancing.
Example: 2 points on a $400,000 loan costs $8,000 upfront to save roughly $65/month — a ~10-year break-even.
FAQ
What is Mortgage Points in simple terms?
Points make sense only if you keep the loan long enough for the monthly savings to repay the upfront cost — the same break-even logic as refinancing.