What's a Point?

A point is a percent of the loan amount. For example if someone says they can give you a rate of 6.25% with a point and the loan amount is $150,000 the point would be $1500. This may be a better deal than getting a rate of say 6.5% with no points. It depends how long you plan on keeping the loan. In this example the difference in payments would be $25 a month so it would make sense to pay the point and take the lower rate if you will own the home and not refinance over the next 5 years.