What’s the point of mortgage points?

Translate this page
A man in a suit holding up his hands in questioning manner

09/30/2016 | Author: Editorial Staff

If you’re financing a property purchase, you’ve probably come across the term points or discount points. Although there are other meanings, most often these terms refer to prepaid interest, with one point equal to 1% of your mortgage loan.

Lenders offer borrowers the opportunity to purchase points on their mortgage, which means you’re paying up front to lower the interest rate of your loan. Here are some questions to ask when deciding whether you should buy points:

How long will you live in the house?
You usually benefit more from points the longer you stay in the property. That’s because the savings you realize on each monthly payment will accumulate and eventually offset—hopefully exceed—your points payment.

Can I afford points?
You need to provide a downpayment and cover the closing costs to secure a mortgage. Do you also want to pay for points? 

How much will the rate come down?
Each point costs 1% of the loan amount, but the interest-rate reduction you receive varies from lender to lender.

Don't worry. Experts like your Texas REALTOR® are available to help you make the decision right for you.

Categories: Buyers
Tags: mortgage, points, buying


Deb on 09/30/2016

As a REALTOR® I believe my business is to assist my client in finding a home, NOT in advising them on financing.  Having one to three preferred lenders I can refer to makes me much more comfortable then getting into my clients financial business.  I want to know my clients are qualified for a loan to a certain amount, but feel we should let THE PROs help our clients with financing decisions. Most of us aren’t lawyers and in most cases are not mortgage personal either.  With all the changes in financing that occurs why take on added risk?

Leave a Comment

Read our commenting policy

Get consumer blog posts via email

advertise with us

Legal disclaimer

The material provided here is for informational purposes only and is not intended and should not be considered as legal advice for your particular matter. You should contact your attorney to obtain advice with respect to any particular issue or problem. Applicability of the legal principles discussed in this material may differ substantially in individual situations.

While the Texas Association of REALTORS® has used reasonable efforts in collecting and preparing materials included here, due to the rapidly changing nature of the real estate marketplace and the law, and our reliance on information provided by outside sources, the Texas Association of REALTORS® makes no representation, warranty, or guarantee of the accuracy or reliability of any information provided here or elsewhere on texasrealestate.com. Any legal or other information found here, on texasrealestate.com, or at other sites to which we link, should be verified before it is relied upon.

Advice for Consumers

You sure you want the internet to solve your real estate problems?

How smart home features can make you safer

What’s the point of mortgage points?


More advice for consumers