Points
Direct definition
Percentage-based fees paid to the lender at closing — one point equals 1% of the loan amount.
Written by the Vabasso Mortgage Editorial Team · Reviewed against agency and federal sources · Read our editorial policy for how we research and review mortgage content
Plain-English explanation
Origination points cover the lender's fee. Discount points buy down the rate. Loan estimates show them separately.
Why it matters
Points can be smart or wasteful depending on how long you keep the loan.
Where you may see it
- Loan Estimate
- Closing Disclosure
- Rate lock confirmation
A real-world example
On a $400,000 loan, 1 discount point ($4,000) may lower your rate by 0.25%.
Educational and illustrative only
A common misunderstanding
Points aren't a required cost of every loan — they're an optional way to trade upfront cash for a lower rate, and 'discount points' differ from origination points.
Ask Vabasso AI
This glossary provides general educational information. Mortgage terminology, qualification methods, forms, timelines, fees, program rules, and legal meanings may vary by lender, investor, loan program, property, occupancy, state, and transaction. Definitions do not represent loan approval, legal advice, tax advice, or a commitment to lend.
- Author
- Vabasso Mortgage Editorial Team
- Reviewed by
- Vabasso Mortgage Licensed Advisory Team
- Last reviewed
- July 30, 2026