What is the benefit of discount points offered by some lenders?

The benefit of discount points provided by lenders is primarily to offer interest rate discounts as incentives. When a borrower chooses to pay discount points upfront, they are essentially prepaying a portion of the interest on the loan. This payment typically results in a lower interest rate for the life of the loan, which can lead to significant savings over time.

By paying these points, the borrower, in effect, buys down the rate, making their monthly payments lower. This can be particularly beneficial for those who plan to keep the mortgage for many years, as the reduction in interest can result in substantial savings compared to a loan without points.

Other options do not capture the essence of discount points accurately. For example, they do not expedite loan approval time, increase total loan amount, or eliminate closing costs directly. Instead, they serve mainly as a strategy for borrowers who want to reduce their long-term interest payments, making the correct answer focused on the discounting of interest rates through upfront payments.