First-time and even second and third-time homebuyers are exposed to an entirely new language when closing on a property. Phrases like Truth in Lending, Good Faith Estimate, and Right of Rescission can feel overwhelming (and a bit like gibberish) when you’re unfamiliar with them. Even something as simple as understanding your interest rate can be confusing when you start looking at all of the different ways your lender has laid it out for you. A term that is certain to make you left-eye twitch are "mortgage points." What are they are they something that would benefit you? In the simplest terms, mortgage points (sometimes called discount points or buy down points) are the fees a borrower pays in order to buy down the interest rate on your mortgage. In other words, you can pay an upfront fee to get a lower interest rate. A point often costs 1% of your mortgage, meaning that if you had a $100,000 mortgage, one point would cost you $1,000. One point usually shaves off .25% of your interest rate. So this is where you need to review your future plans to see if buying a lower interest rate up front makes financial sense. For example, if the points cost you $2,000 upfront and will save you $20 a month in your payment, then your break-even point is 100 months or 8.3 years. So if you are planning to move before, then it would make better sense to pay the higher interest rate. An exception for this would come in the form of a deduction on your income tax. Points are deductible, but only if you itemize. Depending on your circumstances and after talking with your tax professional, paying for mortgage point(s) may have additional benefits.