Discount point maximums and Taxes

I’m currently considering a jumbo loan mortgage (667k) and paying down as many discount points as possible to reduce the interest rate. I’ve asked several lenders for “most possible discount points” and I’ve gotten rates from all over the place ranging from

  1. 0 points / 4.125%
  2. 1.5 points / 3.75%
  3. 5.6 points / 3.25%

The problem here is that some lenders are saying that the “5.6 points” being offered is not legal, though I can’t find literature regarding that.

Additionally, the IRS seems to have a statement on discount points:

The points paid weren’t more than the amount generally charged in that area.

How do I go about verifying that the points I’m paying for (say 5.6 points) is something that is acceptable in my area? How do I verify that the lender can actually offer the discount points they claim to be able to provide and is legal?

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