# Discount Points

*Borrowing & Credit — Finicade finance glossary*

Discount points are upfront fees paid to buy a lower mortgage rate — one point costs 1% of the loan and typically cuts the rate by about 0.25%. Whether it pays depends entirely on the break-even: divide the cost by the monthly saving, and if you'll move or refinance before that many months, points lose. On a $400,000 loan, one point costs $4,000 to save roughly $60 a month, so the break-even is about five and a half years.

**Also known as:** mortgage points, buying points, origination points

**Related terms:** [Mortgage](https://finicade.com/glossary/mortgage), [Interest Rate](https://finicade.com/glossary/interest-rate), [Origination Fee](https://finicade.com/glossary/origination-fee), [Refinancing](https://finicade.com/glossary/refinancing), [APR (Annual Percentage Rate)](https://finicade.com/glossary/apr)

Source: https://finicade.com/glossary/discount-points