Discount points are fees that you can choose to pay to the lender at closing in order to reduce your mortgage interest rate. Each point typically costs 1% of the total loan amount and can lower the interest rate by a certain percentage, often around 0.25%. By buying discount points, you can secure a lower interest rate and potentially save money over the lifespan of the loan. This strategy tends to be more beneficial for those who plan to stay in their home for a longer period.