<prompt> Human: Im looking at two lenders for home loans and both of them have nearly the same rate and apr, however, one also has a column for points with a number in it. From my understanding you can purchase points to lower the APR, but Ive never heard of banks giving these out without paying for them. Are the apr and rate shown most likely after the points are applied? Im not sure how to interpret this.  <response>: 1 Points are additional closing costs that YOU pay in order to purchase a lower rate. I would ask what your par rate is to find out what the rate will be without the additional cost so you can compare your options. The important thing to consider when deciding whether to pay points is your break-even point is. For example, if your payment drops 20month between the par and discounted rate, and it costs you 1500 extra to get that lower rate, it will take you 75 payments just over 6 years to ever see the benefit of that up-front cost 150020 difference in payment75. So if you plan on living in the house longer than the break-even point then it might be worth it, but dont even bother if you think youll move anywhere under 5 years. Obviously that 1500 could come in handy with moving expenses, new furniture, or a fancy new TV, and if your monthly payment is 20 lower thats pretty negligible on a month to month basis. If you are sensitive to paying interest, another good way to manage interest without paying more money upfront is to make extra principal payments. Youll pay off the loan sooner and in turn, pay less interest anyways!2 the APR is NOT the same as your monthly interest rate. The APR is an expression of your total loan cost, as a percentage of your loan amount example: 10k in total loan costs180k loan5.5 APR. This number exists to give you an apples to apples comparison between different options and lenders.If Lender A and Lender B are both offering a 4.5 rate, but you see that Lender A has an APR that is higher than Lender B, then you know the cost to obtain that same rate with Lender A is going to be higher I.e, you probably are being charged extra pointsTried to make this simple but clear! Ive been an MLO for 5 years and this is usually how I explain this to my clients! 