What are Points?

A point is one percent of a loan.  If someone buys a house for $100,000 and gets a mortgage loan for $80,000, one point would be $800.  Points are often required  as an  extra one-time interest  charge when a new loan is placed.  On that mortgage, if the charge was two points, the buyer-borrower would pay $1,600 just once, at the closing.  After that interest would be due at the mortgage's regular rate, 6% or whatever had been agreed.