Discount points are money that you pay up front on your mortgage in exchange for a lower interest rate. One “point” is equal to 1% of the loan amount, so on a $200,000 mortgage, one discount point would be $2,000. If the interest savings over the life of the loan is greater than the points paid, it can be worth it. A mortgage calculator can help you determine whether discount points are a good idea by comparing the effect of various interest rates on your mortgage.