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What Are Mortgage Discount Points? A Potential Money-Saver

At a time when everything seems to be getting more expensive, wouldn’t it be nice to be able to save some money on your mortgage? One way to do that is by buying discount points, which can reduce your mortgage interest rate and monthly payments.

Essentially, discount points are a form of prepaid interest where the borrower pays money upfront in exchange for a lower mortgage rate. This means they'll pay less in interest over the life of the loan, resulting in lower monthly mortgage payments.

It’s important to know that by buying a point, you are not decreasing the interest rate by a full percentage point. But buying points can help you save money.

“They exist for a reason,” said Kevin Ramirez, senior vice president of sales training at New American Funding. “And that mainly is to help you save money in the long run. So, talk to your loan professional to see if it's right for you.”

Kevin Ramirez NMLS # 104026