Key Terms

APR * – The annual percentage rate (APR) is the amount of interest on your total loan amount that you’ll pay annually (averaged over the full term of the loan). A lower APR could translate to lower monthly payments. Points ** Mortgage points, also known as discount points, are fees paid directly to the lender at closing in exchange for a reduced interest rate. This is also called “buying down the rate,” which can lower your monthly mortgage payments. One point costs 1 percent of your mortgage amount (or $1,000 for every $100,000). Essentially, you pay some interest up front in exchange for a lower interest rate over the life of your loan.