Definition
Mortgage points are upfront fees paid to change loan pricing, often to reduce the interest rate.
If you are comparing mortgage options, treat points as one piece of the total cost and risk picture, not a standalone detail.
Why It Matters
Points matter because paying more upfront may lower monthly payment but only pays off if the borrower keeps the loan long enough.
Simple Example
One point usually equals 1% of the loan amount, so one point on $300,000 is $3,000.
How to Use This Term
When you see points on a loan estimate, calculator result, or lender conversation, connect it to three practical questions: how it affects monthly payment, how it affects cash needed now, and how it affects flexibility later.