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• Some lenders require you to prepay a portion of the interest due on your mortgage as a condition of approving the loan. They set the amount due at one or more discount points, with each discount point equal to 1% of the mortgage loan principal.

  For instance, if you must pay one point on a $100,000 mortgage, you owe $1,000.

  From your perspective, the advantages of paying discount points are that your long-term interest rate is lowered slightly for each point you pay, and prepaid interest is tax deductible. The advantage, from the lenders' point of view, is that they collect some of their interest earnings up front.

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  Cite Definition for Discount point

  American Psychological Association (APA)

  Discount point. (n.d.). Yahoo Personal Finance Glossary. Retrieved March 30, 2023, from website: http://www.expertglossary.com/definition/discount-point.

  Chicago Manual of Style (CMS)

  Discount point. finance.yahoo.com. Yahoo Personal Finance Glossary. Yahoo Finance. http://www.expertglossary.com/definition/discount-point (accessed: March 30, 2023).

  Modern Language Association (MLA)

  "Discount point." Yahoo Personal Finance Glossary. Yahoo Finance. 30 March. 2023 http://www.expertglossary.com/definition/discount-point.

• Browse Related Terms: Buy Down, Conventional fixed-rate mortgage, Cooling-off period, Department of Veterans Affairs (VA) mortgage, Discount point, Electronic bill presentment, Federal Housing Administration (FHA), Federal Housing Administration Mortgage, Home Equity Loan (HEL), mortgage-backed securities, Overages, Points, Points (also called discount points), Private Mortgage Insurance (PMI), Redlining, Reverse mortgage

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