Mortgage Points Calculator
Calculate the break-even point for buying mortgage discount points and determine if paying upfront to reduce your interest rate is worth it.
Points Break-Even Analysis
Mortgage points (discount points) let you pay upfront to reduce your interest rate. One point costs 1% of the loan amount and typically reduces the rate by 0.25%.
Point Cost = Loan Amount × (Points × 1%)
Monthly Savings = Payment at Original Rate - Payment at Reduced Rate
Break-Even Months = Point Cost / Monthly Savings
Example: $300,000 loan, buying 1 point:
- Cost: $3,000
- Rate drops from 7% to 6.75%
- Monthly savings: ~$50
- Break-even: ~60 months (5 years)
When it makes sense to buy points:
- You plan to stay in the home longer than the break-even period
- You have extra cash at closing
- You want the lowest possible monthly payment
When to skip points:
- You may move or refinance within a few years
- You need the cash for a down payment or emergency fund