Discount points are charges that you pay up front on your mortgage to get a “discount” in your interest rate. One “point” is equal to 1% of your loan amount, so on a $250,000 mortgage, one discount point would be $2,500. There are basically two considerations in determining whether paying discount points is worth it for you. First, discount points are tax-deductible. Second, paying the discount points gets you a lower interest rate. So, if the interest savings over the life of the loan coupled with the tax savings in the year you pay the discount points is greater than the points paid, it could make financial sense.
Intercap Lending only offers services as a mortgage lender and does not offer tax services. The information above is for educational purposes only and should not be deemed as tax advice. Please consult a tax advisor regarding your personal tax situation.