Maybe you already have a solid interest rate offer for a mortgage, but you’d like to pay even less interest over the course of your loan. It might be possible if you have extra money you can use to buy points. When you do this, you essentially pay off a bunch of interest on your mortgage in advance to get a lower interest rate. One point usually equals .25 percent off your mortgage interest rate (say, reducing it from 4.25 percent to 4 percent). To get that special discount, you’ll pay 1 percent of your mortgage amount. You pay these points at closing, which is why it’s important to have cash on hand after your down payment and your other closing costs.