Points Definition

The word "points" has several possible meanings within personal finances, including:

  • For a bond, a 1% change in the value.
  • For a stock, a $1 change in the share price.
  • For a new mortgage, a measure of the amount of fees charged to make a mortgage loan where each "point" is equal to 1% of the amount of the loan. For example, a $350,000 loan incurring a cost of "three points" would be incurring a cost of $10,500.
  • For an existing mortgage, the difference between the existing mortgage interest rate and the prime interest rate.