Mortgage points are an optional, one-time fee you pay your lender at the closing to reduce your mortgage interest rate. One mortgage point costs 1% of the mortgage loan amount. While mortgage points increase closing costs, a lower interest rate over the
life of the home loan reduces monthly mortgage payments and the amount of interest paid. To really know if mortgage points are worth it, we recommend comparing the cost of the points at closing with the amount of anticipated savings in interest paid.
This anticipated savings varies based on the amount of time you plan to stay in the home or whether you plan to refinance in the near future.