Discount points
An optional fee paid at closing to lower a mortgage's interest rate. One point equals 1% of the loan amount.
Paying points means more cash up front for a lower rate and payment. They tend to pay off only if you keep the loan long enough for the monthly savings to cover the cost.
Lender credits work the other way: a higher rate in exchange for lower closing costs.
Example
One point on a $315,000 loan costs $315,000 × 1% = $3,150.