Points, also called discount points, are an upfront fee paid at closing in exchange for a lower interest rate. One point equals one percent of the loan amount, so one point on a $100,000 loan is $1,000, and points do not have to be whole numbers. A half point on that same loan would be $500.

The Consumer Financial Protection Bureau explains that the same lender, on the same kind of loan, should offer a lower rate with one point than with none, and a lower rate again with two. How much the rate drops depends on the lender, the loan, and market conditions. Points are added to your closing costs and listed on page 2, Section A of both the Loan Estimate and the Closing Disclosure.

Lender credits work in the opposite direction. You accept a higher rate and the lender offsets some of your closing costs, so you pay less up front and more over time. The word points can also describe other percentage based lender fees, so ask whether a charge is tied to a lower rate.

A temporary buydown lowers the payment for a limited period at the start of the loan instead of lowering the rate for the whole term. The loan itself keeps its full note rate, and after the buydown period the payment returns to the amount that rate produces. Paying discount points lowers the interest rate for the mortgage rather than providing a temporary payment reduction.

Fannie Mae's Selling Guide, which sets rules for loans that lenders sell to Fannie Mae, limits a temporary buydown period to 3 years, with the portion of the rate the borrower pays rising by no more than 1% in each year. The guide also says the buydown plan cannot change the terms of the mortgage note, and that the lender must qualify the borrower at the note rate rather than the bought-down rate.

The same guide says the borrower still owes the note payments if the buydown funds are unavailable. Other loan programs may have their own buydown rules, so confirm with a lender.

If a mortgage is assumed, the guide says buydown funds may continue to reduce payments, which is worth asking about. I cover that in my guide to assumable mortgages.

Fannie Mae's guide describes buydowns funded by the lender and buydowns funded by an interested party to the sale. When an interested party provides the funds, Fannie Mae's interested party contribution limits apply.

In a purchase, a contribution from a seller or builder toward a buydown is something to raise early in an offer, because it sits in the same negotiation as other help with closing costs. My guide to closing costs in Nevada lists the other costs that make up the total. Whether a loan program allows a seller contribution toward a buydown is set by that program, so ask your lender.

If a builder offers a rate buydown, ask who funds it, whether it is temporary or permanent, and whether it depends on a particular lender. Terms differ from one offer to the next.

Comparing offers is harder when each lender prices points or credits differently. The CFPB's guidance is to ask for the same amount of points or credits from each lender when you compare, and to request Loan Estimates from different lenders for the same kind of loan so the numbers line up.

The CFPB's Loan Estimate explainer says to compare origination charges across lenders and adds that the total is what matters, since lenders itemize them differently. Its Comparisons section on page 3 shows the APR and the Total Interest Percentage, which are two ways to look at the cost of a loan.

On page 2, the Points line and the Lender Credits line show whether a rate was reached by paying points or by accepting a credit. The explainer also suggests asking how other options would change your rate and total cost.

The explainer notes that some lenders lock your rate with the Loan Estimate and some do not. If you are still deciding when to start these conversations, my guide to pre-approval and pre-qualification explains how that first step works.

Whether points make sense usually comes down to time. You pay a known amount at closing and pay less each month in return, so the question is how many months it takes for the savings to add up to what you paid. The CFPB's tip is to ask a loan officer to show the total costs of two options, with and without points, over a short, a long, and a most likely length of time that you could keep the loan.

The Estimated Total Monthly Payment includes items beyond principal and interest, such as mortgage insurance and escrow. My guide to private mortgage insurance explains how mortgage insurance fits into that payment.

The CFPB notes that points can be a good choice if you plan to keep your loan a long time, and that if you are unsure, you might not want to pay points. That is a personal money decision for you and your lender.

I am a REALTOR®, not a lender, so I cannot quote rates, price points, or tell you which structure suits your situation. What I can do is help you ask organized questions and keep the financing conversation in step with your offer.

If you are relocating and sorting out financing during a move, my Las Vegas Valley relocation checklist puts the loan, moving, and utility steps in order. Lining up financing early gives you time to compare.

• Is this charge tied to a lower rate, or is it another fee?
• What are the rate and the closing costs with zero points and with one point?
• Is any buydown temporary or permanent, and how long does it last?
• Who is funding it, and is the arrangement in writing?
• What is the total of the origination charges?
• What happens to buydown funds if I sell or refinance early?

Bring the same questions to each lender so the answers line up. Terms differ, so ask for them in writing.

If you are also selling a home as part of your move, my seller's guide for Las Vegas and Henderson covers that side of the transaction. Seller contributions are one term that can come up in negotiation.

Every loan has its own details. Rely on the lender's written Loan Estimate rather than any general guide, including this one.