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Real estate financeSubject 5 of 19

Points

Upfront charges expressed as a percentage of the loan amount. Discount points are tied to a reduced interest rate.

Direct answer

What does Points mean?

Upfront charges expressed as a percentage of the loan amount. Discount points are tied to a reduced interest rate.

Exam cue: One point equals one percent of the loan amount. Read whether the question means discount points or another point-based fee.

What does it look like in a question?

New York example

Two points on a $250,000 loan equal $5,000 because each point equals one percent of the loan amount.

Common exam trap

What should you not confuse it with?

A point is based on the loan amount, not the purchase price.

Related real estate finance terms

AmortizationRepayment of debt through scheduled payments that reduce principal over time.Balloon paymentA final payment that is substantially larger than the preceding scheduled payments.Debt serviceThe scheduled principal and interest payments required on debt for a stated period.EquityThe owner's value in property after subtracting liens from the property's value for the calculation being used.ForeclosureThe legal process used to enforce a mortgage lien after default and subject the property to sale or another court-ordered remedy.Loan-to-value ratioThe loan amount expressed as a percentage of the applicable property value or price.
Sources used3 references with section locators

The curriculum citation confirms exam scope. Definition and rule citations support the explanation itself. Links and locators were checked on August 26, 2026.

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