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 · When you take out a mortgage, whether it’s to buy a house or refinance an existing home loan, it’s likely the lender will charge you “points.” A point is a fee equal to 1 percent of the.

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Discount Points and Origination Points There are two types of points: discount points and origination points. Discount points are interest that is prepaid on the loan, and they are tax deductible.

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A point amounts for 1% of the total mortgage, and generally lowers your interest rate by .25%. It is also tax deductible for the year that it was paid. You as the borrower, will see an advantage in paying discount points with the benefit of lowered interest rates.