Points are a type of fee that lenders charge.  They are additional monies you pay the lender at closing to get a lower interest rate on your mortgage.  One point equals one percent of the loan amount.  So if you and your lender agree to a $100,000 mortgage, one point would equal $1,000.  Typically, each point you pay on a 30-year loan lowers your interest rate by .125 of a percentage point.  If the current interest rate on a 30-year mortgage is 7.75 percent, one point would lower the interest rate to 7.625.  It makes more sense to pay points if you plan to stay in your home for a long time. Points are tax deductible when you purchase a home and you may be able to negotiate with the seller to pay for some of them.