Mortgage Points Calculator

Determine if buying discount points to lower your interest rate is a smart financial move.

Loan Details
Configure your mortgage scenario
Points Configuration
Adjust points to see savings
2 Points

Cost: $8,000 (2.00%)

%
%
New Interest Rate
6.500%-0.500%
Monthly Savings
$132.94

Payment: $2,528.27

Breakeven Period
5.1 Years

61 months

Analysis

Long breakeven period (5.1 years). Only worth it if you plan to stay in the home for a very long time.

Breakeven Analysis
Cumulative Cost vs. Cumulative Savings over time
Detailed Comparison
Metric
Standard Loan
With Points
Interest Rate
7.000%
6.500%
Monthly Payment
$2,661.21
$2,528.27
Upfront Cost
$0
$8,000
Total Interest (30y)
$558,035.6
$510,177.2
Net Lifetime Savings
-
$39,858.4

How Mortgage Points Work

Mortgage points (also known as discount points) are fees paid directly to the lender at closing in exchange for a reduced interest rate. This is also called "buying down the rate."

  • 1 Point = 1% of your loan amount. For a $400,000 loan, 1 point costs $4,000.
  • Typical Reduction: Buying 1 point usually lowers your interest rate by 0.25%.

When Should You Buy Points?

Buying points makes sense if you plan to stay in the home and keep the mortgage long enough to recoup the upfront cost through monthly interest savings. This is known as the "breakeven period."

Frequently Asked Questions