Definition of Discount Point:
Mortgage Discount Points Orange County, California:
These are additional points that enable a borrower to pay a lender to lower the interest rate on their loan at closing. Each point is equal to 1 percent of the loan amount (e.g. one point on a $400,000 mortgage would cost $4,000). Also referred to as points; Point options will vary by lender and borrower’s should consider about how much they're ready to invest up front and the length of time they expect to have the mortgage loan when they are deciding whether to ‘buy down their rate’. If a buyer expects to be in a home for a long time (usually defined as greater than 7 years), it might make sense to pay more up-front to benefit from lower interest rate payments for the life of the loan. But, if the buyer doesn't think they'll be in the home for more than a few years, it might make more sense to pay less up-front and make slightly higher interest rate payments. Mortgage discount points are tax deductible as home mortgage interest.