Financial Planning Advices » Financial Terminology » What are Discount Points?
What are Discount Points?
Discount points, usually referred to as just points, are a percentage of the amount of the loan you have taken. The most common use of discount points is to reduce the amount of the monthly payments you make. This is done through the reduction of your interest rate by the purchase of discount points.
One discount point is usually equal to 1% of the loan amount. For example, if the amount of your loan is $200,000 one discount point will be equal to $2,000.
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