Lenox Financial | Technology & Workflow Management for the Mortgage Industry
Commonly Asked Questions Answered by Jon Shibley

What is a Discount Point?

Jon Shibley, President & CEO, Lenox Financial

A Percentage of the Loan Amount

A discount point, simply put, is a percentage of the loan amount paid in order to achieve an interest rate that it is generally lower than you will get by not paying it.

Should I Pay Discount Points?

In the world of mortgages, the interest rates are somewhat on a scale.  People call us and ask, ‘What is your rate?’  And we say, ‘Well, how much do you want to pay?  I can get you down to two percent if you want to spend $30,000, but it may not be worth it.’  Interest rate is a reflection of time and money.  We rarely recommend paying discount points, unless you are really going to be in the house for a very long time and basically have enough time to recover the greater investment you have made in the rate by buying it down with discount points.