What is a mortgage point?

A mortgage point is a one-time upfront fee equal to 1% of the total loan amount, paid to the lender at closing in exchange for a lower interest rate. Paying points — sometimes called buying down the rate — reduces your ongoing monthly payment for the life of the loan. Whether points make financial sense depends on how long you plan to keep the loan and how much you will save monthly as a result of the lower rate.

Points may also be tax-deductible in certain circumstances for primary residences, though buyers should confirm this with a tax professional. For buyers in the Western Catskills purchasing primary homes in Delaware, Otsego, Ulster, or Greene counties and planning to stay long-term, paying points to secure a lower rate can be a smart investment. For second-home buyers who may sell or refinance within a shorter horizon, the break-even calculation is more important — you want to be confident you'll hold the loan long enough for the monthly savings to exceed the upfront cost.