Mortgage points, or discount points, are a form of prepaid interest you can choose to pay up front in exchange for a lower interest rate and monthly payment. One mortgage point is equal to about 1% of your total loan amount, so on a $250,000 loan, one point would cost you about $2,500. Annual Percentage Rate (APR) represents the true yearly cost of your loan, including any fees or costs in addition to the actual interest you pay to the lender. The term is the amount of time you have to pay back the loan. The numbers shown (for example, 10/1 or 10/6) represent the fixed-rate period (10 years) and the adjustment period of the variable rate (either every year or every six months). ARM rates, APRs and monthly payments are subject to increase after the initial fixed-rate period of five, seven, or 10 years and assume a 30-year term. The monthly payment shown is made up of principal and interest. It does not include amounts for taxes and insurance premiums. The monthly payment obligation will be greater if taxes and insurance are included. The term is the amount of time you have to pay back the loan.