What is the difference between interest rates and points?
One point is the equivalent of 1% of your loan. The base interest rate on your loan is the percentage of the principal loan amount, (not to be confused with A.P.R.) and determines the monthly payment on the loan, an amount which is not tax deductible. Points are prepaid interest and may often be tax deductible. The relationship between points and rates is that the more points you pay, the lower your interest rate.
