Mortgage Points Calculator
Mortgage Points Calculator
Determine if buying discount points is worth the upfront cost. Find your breakeven date.
Loan Details
Points & Rates
Breakeven Period
(0 Months)
You need to stay in the home for at least 0.0 years to recover the upfront cost of $4,000.
Monthly Savings
Projected Net Savings (10 Years)
Should I Buy Mortgage Points?
"Points" (or discount points) are fees paid directly to the lender at closing in exchange for a reduced interest rate. One point typically costs 1% of your mortgage amount and lowers your interest rate by 0.25%, though this varies.
The Breakeven Analysis
The most important factor is the Breakeven Point. This is the time it takes for your monthly savings to exceed the upfront cost of the points.
- Keep the house for a long time? Buying points often makes sense because you'll enjoy the savings for years after the breakeven date.
- Planning to move or refinance soon? Buying points usually loses money because you won't recoup the upfront cost before you pay off the loan.
About This Calculator
Calculate whether buying mortgage points is worth it. Compare upfront cost vs monthly savings, break-even timeline, and total interest savings over loan term. Analyze 1-3 points scenarios for 15-year and 30-year mortgages at current rates.
Frequently Asked Questions
What are mortgage points and how do they work?
Mortgage points (discount points) are upfront fees paid to lower your interest rate. 1 point = 1% of loan amount = typically 0.25% rate reduction. Example: $400,000 loan, buy 2 points = $8,000 cost, reduces rate from 7.0% to 6.5%. Monthly savings: $7,000/month payment becomes $6,850 = $150/month saved. Break-even: $8,000 梅 $150 = 53 months (4.4 years). Worth it if staying longer than break-even period.
Should I pay points to lower my mortgage rate?
Pay points if: Planning to stay 5+ years (recoup cost via savings), Have cash available (not draining emergency fund), Getting lower rate not available otherwise, Expect rates to stay high (not refinancing soon). Skip points if: Moving within 3-5 years, Low cash reserves, May refinance if rates drop, Better ROI elsewhere (paying high-interest debt, investing). Rule of thumb: break-even under 5 years = consider points, over 7 years = skip points.
How much do mortgage points cost and save?
Cost: 1 point = 1% of loan. $300k loan: 1 point = $3,000, 2 points = $6,000. Savings: Each point typically reduces rate 0.25%. Example: $300k 30-year at 7.0% = $1,996/month. Buy 2 points ($6,000): Rate 6.5% = $1,896/month, save $100/month = $1,200/year. Total 30-year savings: $36,000 - $6,000 cost = $30,000 net benefit. Break-even: 60 months (5 years).
Are mortgage points tax deductible?
Yes, points are tax deductible as mortgage interest if: Used for primary residence purchase or build, Points are standard in your area, Paid directly (not rolled into loan), Amount is reasonable for local market. Deduction timing: Purchase of primary home: Deduct full amount in year paid. Refinance: Deduct proportionally over loan life ($3,000 over 30 years = $100/year). Must itemize to benefit - points add to standard mortgage interest deduction.
What is the difference between discount points and origination points?
Discount points: Prepaid interest to lower rate, tax deductible, buyer choice, provides long-term savings. Example: 1 point = 0.25% rate reduction. Origination points: Lender fee for processing loan, covers admin costs, may not be tax deductible, less negotiable. Example: 1 point = $3,000 on $300k loan. Total points capped: Many lenders limit total to 3-4 points. Always negotiate origination points, only pay discount points if staying long enough to break even.
Can I roll mortgage points into my loan instead of paying cash?
Yes, but defeats the purpose of buying points. Rolling in points: Increases loan principal, Reduces or eliminates interest savings, Extends break-even significantly, Not tax deductible in year 1. Example: $300k loan, 1 point = $3,000. Pay cash: $3,000 upfront, save $50/month, break-even 60 months. Roll into loan: $303k loan, save $45/month, break-even 67 months PLUS pay interest on $3k (total cost $5,400). Only makes sense if lender credits points (negative points for higher rate).