How does loan discount point work?

[Chad C.]

Dear, BP fellows, 

I have been looking for investment property loan info for AL and recently get quoted with 30years interest rate 7.625% with 2.125 discount point. So for a property around 200k 20% down, right off the bat, there is a 5k+ loan discount fee, plus all other fees, that pushes the closing close to almost 10k. That doubled my initial thought. Why there is a discount point? Does it means in order to get rate of 7.625%, I have to pay 2.125% up-front? 

Also, if I compare different lenders, if we just compare rate, for the same rate, less point is better, right? which means you pay less in order to have the same rate. 

Thanks.