Mortgage Points Calculator
Cost of Points
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New Interest Rate
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Monthly Payment (without)
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Monthly Payment (with points)
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Monthly Savings
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Break-Even (months)
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Should You Buy Mortgage Points?
Mortgage points (discount points) let you prepay interest to get a lower rate. One point costs 1% of the loan amount and typically reduces the rate by 0.25%. On a $300,000 loan, one point costs $3,000 and might lower your rate from 7% to 6.75%.
The key question is break-even time: how many months of lower payments does it take to recoup the upfront cost? If you plan to stay in the home longer than the break-even period, buying points saves money overall.
Points paid at closing are generally tax-deductible in the year of purchase for a primary residence. Consult a tax professional for your specific situation. This calculator helps you analyze whether points make financial sense for your timeline.
Frequently Asked Questions
What are mortgage points?
Discount points are upfront fees paid to reduce your interest rate. One point = 1% of the loan amount. Each point typically lowers the rate by 0.25%.
How do I calculate break-even?
Divide the cost of points by the monthly payment savings. If points cost $6,000 and save $85/month, break-even is about 71 months (5.9 years).
Are mortgage points tax deductible?
Generally yes for a primary residence purchase. Points on refinances must be amortized over the loan term. Consult a tax advisor.
When should I NOT buy points?
If you plan to sell or refinance within a few years, you won't recoup the upfront cost. Points make more sense for long-term homeowners.