What might be a risk of using discount points?

Using discount points can indeed lead to increased closing costs upfront. Discount points are fees paid to the lender at closing, which can lower the interest rate on a mortgage. Each point is equal to 1% of the loan amount and can represent a substantial expense upfront. By choosing to pay for discount points, borrowers generally increase their initial costs in exchange for a potentially lower interest rate over the life of the loan.

This decision should be carefully weighed against the borrower's financial situation and how long they plan to stay in the home; this is because while the monthly payments may decrease due to a lower interest rate, the bolder upfront investment may not yield savings unless the borrower remains in the mortgage long enough to recoup that initial expense through reduced payments.

The other choices relate to aspects not directly influenced by discount points. Higher monthly payments may occur due to a higher interest rate but is not a natural consequence of paying for discount points; lower loan amounts and issues with ineligible credit scores do not directly correlate to the choice of using discount points. Therefore, the risk associated with utilizing discount points primarily pertains to the increased closing costs that borrowers must manage at the outset.