Mortgage Points Calculator
Determine if paying for discount points on your mortgage is worth the upfront cost by calculating your break-even point.
Understanding Mortgage Discount Points
Mortgage discount points (or simply "points") are an upfront fee you pay to your lender at closing in exchange for a lower interest rate over the life of your loan. This is also known as "buying down the rate."
How Points Work
Typically, one point costs 1% of your total loan amount. For example, 1 point on a $300,000 mortgage costs $3,000. Paying this might reduce your interest rate by 0.25%.
Worked Example
- Loan Amount: $300,000
- Points: 1 (Costs $3,000)
- Old Rate: 7.0% -> Payment: $1,995/mo
- New Rate: 6.75% -> Payment: $1,945/mo
- Monthly Savings = $50
- Break-Even Time = $3,000 / $50 = 60 Months (5 Years).
Frequently Asked Questions
Should I buy points?
If you plan to stay in the home longer than the break-even time (e.g., 5 years), buying points will save you money in the long run. If you plan to move or refinance sooner, you will lose money on the points.
Disclaimer: This calculator is for educational and informational purposes only. It is not a substitute for professional financial advice. Results are estimates based on the information provided and may not reflect actual outcomes. Please consult with a qualified financial advisor, accountant, or tax professional before making any financial decisions. Past performance does not guarantee future results.