What is a Discount Point?

Jon Shibley, President & CEO, Lenox Financial

A Percentage of the Loan Amount

A discount point, simply put, is a percentage of the loan amount paid so you can achieve an interest rate that it is generally lower that you will get by not paying it.

Should I Pay Discount Points?

In the world of mortgages, the interest rates are somewhat in a scale. People call us and ask, ‘What is your rate?’ And we say, ‘Well, how much do you want to pay? I can get you down to two percent if you want to spend $30,000, but it may not be worth it.’ Interest rate is a reflection of time and money. We don’t always recommend discount points unless you are really going to be in the house for a very long time and basically have enough time to get your money back.