Mortgage Points Calculator
Decide whether buying discount points pays off before you are likely to move or refinance.
Free · No sign-up · Your inputs stay in your browser
Your numbers
Decide whether to buy the rate down
Your projection
Points pay off by $2,659
Cost of the points
$3,500
Monthly saving
$57.86
At 6.500%.
Break-even
61 months
Most loans are refinanced or paid off by a sale well before the term ends. If rates fall and you refinance in year three, the points bought in year one are mostly lost.
About this tool
Method, assumptions, practical next steps, and limits.
Paying now to pay less later
One discount point costs 1% of the loan amount and lowers the rate by an amount the lender sets. Whether it pays depends almost entirely on how long you keep the loan.
How the calculation works
Break-even months = cost of points ÷ monthly payment saving. The net figure also counts the lower balance a lower rate leaves after the same number of payments.
On a $350,000 loan at 6.75%, one point costs $3,500 and cuts the rate to 6.5%. The payment falls by $57.86 a month, so break-even is about 61 months. Keeping the loan seven years leaves a net gain of about $2,660.
The risk
If rates fall and you refinance, or you sell, before break-even, most of the points are lost. Points may be deductible as mortgage interest if you itemize; IRS Publication 936 covers the rules.
