Discount points are upfront fees paid to a mortgage lender at closing in exchange for a lower interest rate on your loan. One point equals 1% of your loan amount, so on a $300,000 mortgage, one point would cost $3,000. Paying points makes sense if you plan to stay in the home long enough for the monthly savings from the lower rate to outweigh the upfront cost, a calculation known as the break-even point. If you sell or refinance before reaching that break-even, you may end up losing money on the points you paid. When comparing mortgage offers, it's important to look at whether a low rate comes with points baked in, as the true cost of the loan depends on both the rate and any points paid.