One point means 1% of the loan amount. For example, on a $350,000 loan, one point would be $3,500. Points are typically used to buy down the interest rate on a loan. The more points you pay, the lower the interest rate will be. Hard money loans usually have higher interest rates than traditional loans because they are considered to be higher risk. As a result, borrowers often use points to try to reduce their interest rate and make the loan more affordable. While paying points does increase the upfront cost of the loan, it can save money in the long run by reducing the monthly payments.