How to use the Mortgage Points Calculator
- 1 Enter the loan amount.
- 2 Enter the rate without points and the rate with points.
- 3 Enter the number of points.
- 4 Read the break-even and savings.
Worked example
A $400,000 loan at 6.75%, or 6.25% with 2 points. The points cost $8,000 and cut the payment by about $131.52 a month, so break-even is about 61 months. After 5 years you are still about $109 behind, but over the full 30 years the saving is about $39,348.
Features
Break-even month
Cost of points divided by monthly savings.
5-year view
Net saving after five years.
Full-term view
Net saving if you keep the loan to the end.
When to use it
Buying a home
Decide whether to pay for points at closing.
Refinancing
Weigh points on a refinance.
Seller credits
Use seller concessions to buy down the rate.
Short stays
See why points rarely pay off if you move soon.
Frequently asked questions
What is a mortgage point?
One discount point costs 1% of the loan amount and usually lowers the rate by about 0.125% to 0.25%.
When are points worth it?
When you keep the loan longer than the break-even period without refinancing or selling.
Are points tax-deductible?
Points on a loan to buy your main home are usually deductible in the year paid if you itemize.
What are lender credits?
The opposite of points: you accept a higher rate in exchange for money toward closing costs.
Should I buy points if rates may fall?
Be careful. If you refinance before break-even, the points are lost.
Can the seller pay points?
Yes, sellers can pay points as part of agreed closing cost concessions.
How much does one point lower the rate?
It varies by lender and market, often about 0.25% per point. Get quotes from several lenders.
Are points the same as origination fees?
No. Origination fees pay the lender for the loan, while discount points buy a lower rate.
Can I finance points?
Sometimes, by adding them to the loan amount, but that increases the balance and interest.
Are points worth it on an ARM?
Usually less so, because the rate can change after the fixed period.
Should I compare APR?
Yes. APR includes points and fees, which makes loans with different points easier to compare.
What if I sell before the break-even month?
You lose money on the points, because the monthly savings have not yet paid back their cost.
Do points make sense for investors?
Sometimes, if the property will be held a long time, but the cost is usually deducted over the loan term for rentals.
What is a temporary buydown?
A 2-1 buydown lowers the rate for the first one or two years only, often paid by a seller or builder.
Results are estimates based on the official rates linked above. Confirm important figures with the issuing authority or a qualified adviser before you act on them.
Reviewed by ToolsUnlocked Team · Last updated