For home buyers, deductible expenses include settlement changes for points. Deductible points are upfront charges for the use of money (not services).  One point equals 1% of the loan amount. Points paid by either the buyer or seller are deductible by the buyer in the year of the purchase. Although some closing service fees are quoted as "points", they are not deductible. Points are basically prepaird interest and are bought up front to reduce the interest rate of the loan.  A rule of thumb says that if you are going to keep the loan for longer than 5 years, this works out to be a good idea but do the math before requesting this!