Discount points

If for a $100,000 loan, the [percentage] points are 1.5, then one pays $1,500 in points because ${\frac {1.5}{100}}\times \$100,000=\$1,500$. We have ignored other factors in a loan in order to focus on the idea of a point herein.

A point is one of the important factors in the calculation of the annual percentage rate for a mortgage.

Sometimes points are referred to as origination fees. An origination fee of 2% on a $200,000 loan is $4,000. In some cases, one has to pay points plus origination fees.

Some lenders refer to points as discount points.