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  Points (Discount Points) Definition
Points (Discount Points) The fee you pay up front to the lender at the time of closing. Each point you pay will equal one percent of your mortgage amount and for each point paid, your interest will normally drop by one-quarter of a percentage point. For example, if you are taking out a mortgage of $200,000 and were to pay 2 points at closing to get an interest reduction of of a percent, you would need to pay $4,000 for those points. Costs like origination fees can also be expressed in points.

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