 TITLE: How Much Does a Mortgage Point Cost? CONTENT: How Much Do the Different Types of Mortgage Points Cost?\n--------------------------------------------------------\nThere are two types of mortgage points you may come across during the homebuying process: origination points and discount points. In both instances, the cost of a point is typically 1% of the loan amount. So if you have a $250,000 mortgage, the cost of one point is $2,500.\n*   **Origination points**: These points are often included in the cost of originating your loan. They don't affect the interest rate on your loan but do allow you to compare costs among mortgage lenders while you're shopping around. This is because one lender may charge more or fewer points than another.\n*   **Discount points**: During the mortgage process, you may be able to pay for discount points in exchange for a lower interest rate. In most cases, one discount point reduces your interest rate by 0.25%. For example, let's say you have a $250,000 mortgage with a 3.5% interest rate. By paying one point ($2,500), you could reduce your rate to 3.25%.\nOrigination points may be negotiable, especially if you've found another lender that charges less. With discount points, on the other hand, it only makes sense to pay them if doing so will save you money in the long run.\nContinuing with the previous example, a $250,000 loan with a 3.5% rate would give you a $1,123 payment for principal and interest. If you were to buy down the rate to 3.25%, your monthly payment would drop to $1,088—a decrease of $35.\nTo find out if that's worth it, you'd divide $2,500 by $35, which tells you that you'd need to remain in the home without refinancing your loan for roughly 71 months, or about six years, to break even. END