Mortgage interest rates are at all-time lows, but that doesn’t mean you should just jump on the first rate you’re offered. One way to get a lower interest rate is to pay discount points. But what are they, and are they worth it?

This guide explains what discount points are, how they work, and whether or not they’re worth it for you.

What Are Discount Points on a Mortgage?

Discount points are a way to lower your interest rate by paying upfront costs. Each point is 1 percent of the loan amount. That means on a $300,000 mortgage, one point would cost $3,000.

Paying discount points can lower your interest rate because you’re essentially prepaying some of the interest. The more points you pay, the lower your interest rate will be.

How Do Discount Points Work?

When you’re taking out a mortgage, the interest rate isn’t just set by the market. There are other factors that affect it as well, like your credit score and down payment.

But one way to get a lower interest rate is to pay discount points. The more points you pay, the lower your interest rate will be.

How Do You Buy Discount Points?

Discount points are paid at closing, and they’re usually paid with cash or from your loan amount.

For example, say you’re taking out a $300,000 mortgage with a 4 percent interest rate. You could buy one point for $3,000 and lower your interest rate to 3.5 percent.

Or you could buy two points for $6,000 and lower your interest rate to 3 percent.

Should You Buy Discount Points?

Discount points are a way to lower your interest rate, but they’re not for everyone.

Before you decide whether or not to buy discount points, you should consider how long you plan on staying in your home. If you’re only planning on staying in your home for a few years, it might not make sense to buy discount points because you won’t save enough in interest to outweigh the upfront costs.

However, if you’re planning on staying in your home for 10 years or more, buying discount points could save you thousands of dollars in interest over the life of your loan.

You should also consider your financial situation. If you have the cash on hand to pay for discount points, it might make sense to do so. But if you’re tight on cash, it might not be worth it to pay the upfront costs.

Ultimately, whether or not to buy discount points is a personal decision. You should weigh the pros and cons and decide what’s best for you.

Discount points are a way to lower your interest rate by paying upfront costs. They’re not for everyone, but if you’re planning on staying in your home for a long time, they could save you thousands of dollars in interest.

$1,100,000

4 Bedrooms
6 Bathrooms
6,861 Sq Ft
22.830 Acres

445 3rd Avenue Jasper, Indiana

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Listing courtesy of Steve Lukemeyer from F.C. TUCKER EMGE.

$637,000

4 Bedrooms
5 Bathrooms
5,388 Sq Ft
1.064 Acres

1987 Grandview Drive Jasper, Indiana

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Listing courtesy of Steve Lukemeyer from F.C. TUCKER EMGE.

$575,000

3 Bedrooms
3 Bathrooms
1,776 Sq Ft
6.260 Acres

1928 South A Street Jasper, Indiana

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Listing courtesy of Arlet Jackle from RE/MAX Local.

$399,000

3 Bedrooms
3 Bathrooms
2,940 Sq Ft
2.530 Acres

634 E Wright Road Jasper, Indiana

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Listing courtesy of Stacey Hurst from RE/MAX REVOLUTION.

$360,000

4 Bedrooms
2 Bathrooms
3,490 Sq Ft
0.371 Acres

307 Newton Street Jasper, Indiana

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Listing courtesy of Tama Stemle from RE/MAX Local.

$336,000

3 Bedrooms
2 Bathrooms
1,502 Sq Ft
0.344 Acres

900 Juniper Court Jasper, Indiana

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Listing courtesy of Dara O'Neil from F.C. TUCKER EMGE.

$334,900

3 Bedrooms
3 Bathrooms
2,734 Sq Ft
0.580 Acres

980 S Crestwood Dr. Jasper, Indiana

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Listing courtesy of Larry Carpenter III from Carpenter Realty LLC.

$334,900

3 Bedrooms
4 Bathrooms
1,568 Sq Ft
1.100 Acres

4667 W Ireland Church Avenue Jasper, Indiana

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Listing courtesy of Marissa Goodness from Carpenter Realty LLC.

$270,000

3 Bedrooms
3 Bathrooms
2,548 Sq Ft
0.259 Acres

920 Brandon Avenue Jasper, Indiana

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Listing courtesy of Sandra Cave from RE/MAX Local.

$229,900

4 Bedrooms
3 Bathrooms
2,549 Sq Ft
0.124 Acres

612 W 8th Street Jasper, Indiana

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Listing courtesy of Dara O'Neil from F.C. TUCKER EMGE.

$208,000

2 Bedrooms
2 Bathrooms
1,800 Sq Ft
0.208 Acres

891 Giesler Road Jasper, Indiana

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Listing courtesy of Kevin Bayer from RE/MAX Local.

$198,500

3 Bedrooms
1 Bathrooms
1,086 Sq Ft
0.360 Acres

4862 N US 231 Highway Jasper, Indiana

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Listing courtesy of Kevin Bayer from RE/MAX Local.

$149,900

4 Bedrooms
2 Bathrooms
1,963 Sq Ft
0.101 Acres

1312 Mill Street Jasper, Indiana

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Listing courtesy of Felicia Drew from Carpenter Realty LLC.

$619,700

5 Bedrooms
5 Bathrooms
4,353 Sq Ft
1.115 Acres

470 Charlene Drive Jasper, Indiana

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Listing courtesy of Brenda Welsh from SELL4FREE-WELSH REALTY CORPORATION.

$599,000

1 Bedrooms
2 Bathrooms
662 Sq Ft
27 Acres

6272 N Kellerville Road Jasper, Indiana

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Listing courtesy of Gary Schnell from SELL4FREE-WELSH REALTY CORPORATION.

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This majestic two story home on nearly 23 acres inside the city limits of Jasper is truly one of a kind. As you come up the winding driveway, the property will "wow" you. Inside the front door you will see the two story-foyer, spacious living room with gas fireplace, and the grand dining room with magnificent chandelier. The huge kitchen has been completely remodeled with custom cabinets, quartz countertop, and all of the appliances a chef would want. The family room provides even more space and also has a gas fireplace. The guest suite on the main floor could also be used as a master suite. Upstairs you will find a master suite with a 19' x 15' walk-in closet loaded with shelves and an island. There are two more roomy bedrooms, both of which share access to a recreation room that would be a kid's dream, along with another full bathroom. The finished basement has a wet bar, large recreation area, and a half bathroom. The freshwater pool was installed in 2014, and comes with a climate-controlled pool house with full bathroom. Like tennis? Serve it up on the like-new tennis court that was resurfaced in 2021. The detached garage also has office space and a loft, which is wonderful for people who work from home but don't want the distractions of home. This fantastic home has all new Anderson windows and new flooring throughout the main floor. Also, the landscaping is irrigated, so go enjoy your evenings doing something fun!

$1,100,000 Active

445 3rd Avenue Jasper, Indiana

4 Beds 6 Baths 6,861 SqFt 22.830 Acres

Listing courtesy of Steve Lukemeyer from F.C. TUCKER EMGE.

SPACIOUS Describes this 3 bedroom, 2 1/2 bath home with over 1,800 finished square feet, attached oversize 2-car garage on double corner fenced lot with utility shed in backyard. HiLite of Living room is large wall Fireplace; yet it is semi-open to Dining Room & adjoining equipped kitchen. Half Bath & Massive Laundry are convenient to kitchen and entry from garage. Three Full Size bedrooms and 2 Full Baths are down the hall to the Left of the living area. Many rooms have 'Original Oak Hardwood Floors'! For outside entertaining there is a 10 x 22 covered deck as well as two open concrete patios with access to full lot backyard anxious for a New Owner's Playground and/or Garden Spot. City of Huntingburg E/W/S/G Budget Billing $248/Month. Conveniently located on the 'Walking Trail' from Huntingburg Elementary, Southridge Middle & High Schools Complex into Huntingburg to City Park, Historic League Stadium, Uptown Shopping and Huntingburg Memorial GYM. Don't Miss Your Opportunity On This 'Special Find'!

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