Mortgage Glossary
Discount Points
Defined by Onias Derilus, Mortgage Capital · NMLS# 1859012 · Florida licensed mortgage broker
Discount points are upfront fees paid to the lender to permanently lower your mortgage interest rate, with one point costing 1% of the loan amount.
What Discount Points means
Each point typically buys roughly a 0.25% rate reduction. Whether points pay off depends on how long you keep the loan, since you recover the cost through lower payments over time.
Florida example
On a $400,000 Florida loan, one point costs $4,000 and might drop the rate from 6.75% to 6.5%, saving about $65 a month. The break-even is around five years, so points suit long-term owners.
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