Should You Buy Mortgage Points?

Discount points are upfront fees paid to the lender to reduce your interest rate. One point costs 1% of your loan amount and typically reduces your rate by 0.25%.

The Break-Even Formula

To determine if points are worth it:

Break-Even Months = Points Cost / Monthly Savings

Example:

• Loan Amount: $400,000
• Points Cost: $4,000 (1 point)
• Monthly Savings: $65
• Break-Even: 62 months (5.2 years)

When to Buy Points

Buy points if:

• You'll keep the loan past the break-even point
• You have extra cash at closing
• You want predictable long-term savings

Skip points if:

• You might sell or refinance soon
• You're short on closing funds
• Break-even is longer than your expected tenure

Calculate Your Break-Even

Use our Points Break-Even Calculator to see exactly how long until your points pay off.