I keep hearing about 'points'? Are points the same thing as fees?

Are mortgage points the same as fees?

You're hearing about mortgage points and wondering if they're just another word for fees. Points and fees are related but different—points are a specific type of fee you can choose to pay.

Mortgage points, also called discount points, are fees you pay upfront to lower your interest rate. Each point typically costs 1% of your loan amount and reduces your rate by about 0.25%. So on a $300,000 loan, one point would cost $3,000. Points are optional—you can buy them to get a lower rate, or skip them and keep your upfront costs down.

Fees are broader and include all the costs for getting your loan: origination fees, appraisal fees, title insurance, and yes, points if you choose to buy them. Your Loan Estimate shows points on Section A and other lender fees on Section B.

If you're considering points, compare how much you'll save monthly versus the upfront cost. Share your Loan Estimate with the lender and they can walk you through different rate and point combinations to see what works for your situation.