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• One point is equal to 1 percent of the principal amount of a mortgage loan. For example, if a mortgage is $200,000, one point equals $2,000. Lenders frequently charge points in both fixed-rate and adjustable-rate mortgages to cover loan origination costs or to provide additional compensation to the lender or broker. Points are paid usually on the loan closing date and may be paid by the borrower or the home seller, or split between the two parties. In some cases, the money needed to pay points can be borrowed, but doing so will increase the loan amount and the total costs. Discount points (sometimes called discount fees) are points that the borrower voluntarily chooses to pay in return for a lower interest rate.

  The Federal Reserve Board - Cite This Source - This Definition
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  Cite Definition for Points (also called discount points)

  American Psychological Association (APA)

  Points (also called discount points). (n.d.). A Consumer's Guide to Mortgage Refinancings. Retrieved April 1, 2023, from website: http://www.expertglossary.com/definition/points-also-called-discount-points.

  Chicago Manual of Style (CMS)

  Points (also called discount points). www.federalreserve.gov. A Consumer's Guide to Mortgage Refinancings. The Federal Reserve Board. http://www.expertglossary.com/definition/points-also-called-discount-points (accessed: April 1, 2023).

  Modern Language Association (MLA)

  "Points (also called discount points)." A Consumer's Guide to Mortgage Refinancings. The Federal Reserve Board. 1 April. 2023 http://www.expertglossary.com/definition/points-also-called-discount-points.

• Browse Related Terms: Annual Percentage Rate (APR), application fee, appraisal fee, HUD-1 Uniform Settlement Statement, Loan origination fees, point, Points (also called discount points), Prepayment penalty/prepayment premium, Unpaid Principal Balance (UPB)

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