Business and Personal Finance Dictionary

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• DISCOUNT POINTS
  
  One discount point is equal to 1 percent of your loan amount. On a 100,000 mortgage loan 1.5 discount points equals ($100,000 * 1.5 percent)=$1,500. Discount points are paid to obtain a lower interest rate on your mortgage. The more points you pay, the lower the rate you may obtain. The longer you own your property and continue to pay on the loan, the more likely it will be that paying points will be advantageous for you. If you intend to hold the mortgage for only a short period of time, the cost you pay up front may exceed the benefit you will receive from obtaining a lower rate.
  
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