Discount Points have both a monetary value and a percentage value. The monetary value is the upfront cost of the point which equates to 1% of the total mortgage amount. The upfront value is paid by the borrower to buy down the interest rate of the mortgage. The percentage value of a discount point is the increased percentage yield to the overall effective yield of the interest rate. The percentage value of the discount point is 1/8 of 1% or .125 added to the interest rate.
