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  Discount Point Definition
Discount Point When you take out a mortgage, your lender may charge you points. Each point costs 1 percent of the loan amount and for each point you pay, you will normally receive an interest rate reduction of ¼ of a percent. For example, if you were to take out a mortgage for $150,000, three points would cost you $4,500 and your loan’s interest rate would be reduced by 0.75 percent. Sometimes when you’re negotiating the purchase of your home, you can get the seller to agree to pay some of your points.

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