Mortgage Points Calculator
Calculate if paying for "discount points" upfront is a smart move for your mortgage.
Break-Even Point
5 Years
Highly Recommended
Upfront Cost $3,000
Monthly Savings +$50
Net Savings (over 10 yrs) +$3,014
Side-by-Side Comparison
No Points (7%)
With 1 Pts (6.750%)
Monthly P&I
$1,996
$1,946
Upfront Cost
$0
$3,000
Should You Buy Points?
Discount points are essentially prepaid interest. By paying more upfront, you lock in a lower interest rate for the entire life of your loan.
How Points Work
Typically, one point costs 1% of your total loan amount and reduces your interest rate by 0.25%.
- Example: On a $400,000 loan, 1 point costs $4,000.
- If your rate drops from 7.0% to 6.75%, you save money every month.
- Points are often tax-deductible (consult a tax professional).
The Break-Even Analysis
The most important factor is how long you plan to keep the mortgage (either before moving or refinancing).
- Long-Term: If you stay for 15+ years, points are almost always worth it.
- Short-Term: If you plan to move next year, you'll never recover the upfront cost.
- Refinance Risk: If you buy points today but refinance in 2 years, you waste the points cost.