Resources > Glossary > Discount Points

Glossary of Notary Public, Mortgage, Signing Agent, and Loan Signing Terms.

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Common Terms 1   Common Terms 2

Discount Points

Function: noun

By charging the borrower points, the lender increases the yield on the loan above the amount of the stated interest rate. A borrower can offer to pay a lender points as a method of redicing the interest rate on the loan, thus getting a lower monthly payment in exchange for the up-front payment.

Definition 1:
See "Points". Points are prepaid interest assessed at closing by the lender. Each point is equal to one percent of the loan amount, e.g. three points on a $100,000 mortgage would cost $3,000. In many cases, a borrower can get a slightly lower rate, by paying more points up front.