mortgage points, rate buydown, mortgage rates, home buyers, Virginia real estate, Arlington VA, first-time buyer

What Are Mortgage Points and a Rate Buydown?

One discount point equals one percent of your loan amount, paid at closing to lower your interest rate. A buydown is a way to lower the rate or payment, and sometimes a seller pays for it.

What is a mortgage point?

One discount point equals one percent of your loan amount, paid at closing to lower your interest rate. A buydown is a way to lower the rate or payment, and sometimes a seller pays for it.

With rates high, buyers ask how to bring the payment down. Points and buydowns are two tools. They are worth understanding before you sign.

The Mike Webb Team (Mike and Claudia Webb, RE/MAX Allegiance) helps homeowners in Arlington, Northern Virginia, Maryland, and Washington, DC get their homes ready to sell and sold.

What is a discount point?

The Consumer Financial Protection Bureau explains it this way: one point equals one percent of the loan amount. On a $100,000 loan, one point costs $1,000. You pay points at closing, and they lower your interest rate compared with a loan with no points from the same lender. Points can also be fractions, such as half a point.

What are lender credits?

They work the other way. You accept a higher interest rate, and the lender gives you money toward your closing costs. The more credit you take, the higher your rate.

Where do I see them?

Points show on page 2 of your Loan Estimate and your Closing Disclosure, so you can compare one lender with another.

What is a rate buydown?

A buydown is a way to lower your interest rate or your payment. A permanent buydown is the same idea as paying points. A temporary buydown lowers the payment for the first year or two, and then the rate goes up to the full rate. A seller may agree to pay for one as part of a deal. Terms differ by lender, so ask for them in writing.

Is it worth paying points?

It depends on how long you will keep the loan. Points cost money now and save money each month. The longer you stay, the more time to earn that cost back. Ask your lender how many months it takes to break even, and compare that with how long you plan to stay.

What are rates now?

Freddie Mac reported the average 30-year fixed rate at 7.40% for the week of October 15, 2026. Your own rate depends on your loan, your credit, and your lender.

FAQ

Can the seller pay for my points?

Sometimes a seller helps with closing costs or a buydown as part of the offer. It depends on the loan and the contract.

Do points lower my price?

No. They lower your interest rate, not the price of the home.

Should I refinance later instead?

No one can predict rates. Ask your lender about the costs of each path.

Call or text The Mike Webb Team at 703-350-3884 or visit claudiawebb.com.

The Mike Webb Team, RE/MAX Allegiance. Arlington, Virginia. Equal Housing Opportunity.