What is a discount point?
A discount point is paid to the lender to permanently buy down or lower an interest rate. It is usually a percentage of the loan amount. What is prepaid interest? This is the interim interest that accrues on the mortgage loan from the date of the loan closing to the beginning of the period covered by the first monthly payment. For example, If your closing date is scheduled for June 15, the first mortgage payment is due August 1st. The lender will calculate a per-day interest amount that is collected at the time of closing. This amount covers the interest accrued from June 15 to July 1.
