Mortgage points are fees paid to the lender in exchange for a reduced interest rate on a mortgage loan. Each point costs 1% of the total loan amount, for example, one point on a $100,000 loan would be $1,000. By buying points, you reduce the interest rate of your loan, typically by 0.25% per point. You can often buy a fraction of a point or up to as many as three whole points. The longer you plan to live in a home, the more benefit you’ll get from paying for points. However, keep in mind that this requires an upfront payment, and the reduced interest rate will only save you money over the long term. Typically, you would buy points to lower your interest rate on a fixed-rate mortgage. Buying points for adjustable-rate mortgages only provides a discount on the initial fixed period of the loan and isnt generally done. The APR on each loan adjusts the advertised interest rate on the loan to include all discount points, fees, origination points, and any other closing costs for the loan.