Mortgage points are upfront fees on a mortgage expressed as a percent of the loan amount, where 1 point is 1% of the loan. Points are part of the charge for a loan, along with the interest rate and other lender fees expressed in dollars.
In some cases, a lender will offer you the option to pay points along with your closing costs. In exchange for each point you pay at closing, your mortgage APR will be reduced and your monthly payments will shrink accordingly.
You can use this mortgage points calculator to compare a loan with no points versus a loan where you are paying points. The calculator figures out how much you will save off your monthly mortgage by paying points, and how many months it will take to recover the points paid.