Can someone explain points

[Blake M Pursel]

Hey guys! New investor here from Leavenworth KS, just west of Kansas City! 
I've acquired my first two rentals this year, and will start the renovations on one of them for my first BRRRR when it becomes vacant January 15th!
I'm looking to connect with local investors, and others from the area that into REI!

Separately, could someone explain to be exactly what points are on a loan, and how they work exactly. 

I’ve been doing a ton of reading, listening to books and podcasts, and scouring these forums. That being said, this is a concept that confuses me. 

All replies are appreciated! 
Thanks!

[JD Martin]

Points on a loan is just interest paid in advance. 1 point = 1%. So if you had to pay 2 points on a $100k loan, you would be charged $2000. 

You can sometimes buy down your interest rate on a mortgage by paying points. Whether or not it makes sense depends on a lot of factors - how long you intend to keep the property, the rate differentials, etc. Banks prefer points to interest rate because they get their money on the front end, then sell the loans to Fannie/Freddie and service them.