Mortgage Points Calculator: Are Points Worth It?
Find out if mortgage points pay off: the cost of the points, the lower payment, the break-even month and your net gain for the years you keep the loan.
| After (years) | Net gain |
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What it does
Mortgage points (discount points) are interest you pay up front at closing to get a lower rate. One point costs 1% of the loan and often cuts the rate by about 0.25 percentage points. The calculator compares both payments, finds the month the savings pay back the points, with and without the lower balance you owe, and shows your net gain for each holding period.
How to use it
- Type the loan amount, the term and the rates your lender quotes with and without points.
- Type how many points and the cost per point, usually 1% of the loan.
- Type how long you expect to keep the loan and see the break-even and your net gain.
The arithmetic runs in your browser. Nothing you type is sent anywhere and nothing is stored, so you can use these with real numbers.
Frequently asked questions
Are mortgage points worth it?
On 400,000 over 30 years, 7% or 6.5% with 2 points: the points cost 8,000 and save 132.94 a month, paying back in 61 months, or 48 counting the lower balance. Keeping the loan 7 years, you come out 6,091.46 ahead.
How much does one mortgage point cost?
One point is 1% of the loan: 4,000 on a 400,000 mortgage. Each point usually lowers the rate by about 0.25 percentage points, but lenders set their own prices, so compare the quotes.
When should I not buy points?
If you might sell or refinance before the break-even, or if the cash would do more as a bigger down payment, for example to avoid mortgage insurance. Selling after 3 years in the example above, you lose money.
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