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Discount Points โ€” Buy Down Your Rate

Pay points upfront to lower your rate. Calculate break-even to see if it pays off.

Concept Fundamentals
5.1 years
Break-Even
$8,000
Points Cost
$133
Monthly Savings
Yes
Worth It?

Did our AI summary help? Let us know.

1 pt = 1% of loan ~0.25% per point 5 yr typical break-even Points may be deductible

Key figures
5.1 years
Break-Even
Key figure
$8,000
Points Cost
Key figure
$133
Monthly Savings
Key figure
Yes
Worth It?
Key figure

Ready to run the numbers?

Why: Points reduce rate but cost upfront. Break-even tells you if you will stay long enough to benefit.

How: 1 point = 1% of loan. Break-even = points cost รท monthly savings. Stay past break-even to save.

1 pt = 1% of loan~0.25% per point
Sources:IRS Pub 936CFPB

Run the calculator when you are ready.

Calculate Points

Sample Scenarios

Loan Information

Mortgage amount
$
Without points
%
15 or 30 typical
years

Points Information

1 point = 1% of loan
points
Typically 0.25%
%
How long you'll stay
years
discount_points.sh
CALCULATED
$ analyze --type=discount-points
Points Cost
$8,000
Monthly Savings
$133
Break-Even
5.1 yr
Net Savings
$3,167
Share:
Discount Points Calculator
Net Savings
$3,167
numbervibe.com

Monthly Payment Comparison

Total Loan Cost Breakdown

Break-Even Analysis

Net Savings Analysis

Calculation Breakdown

Loan Details

Loan Amount$400,000
Base Rate7%
Points Purchased2 points
Points Cost$8,000
New Rate6.500%

No Points

Monthly Payment$2,661
Total Interest$558,036

With Points

Monthly Payment$2,528
Total Interest$510,178

Analysis

Monthly Savings$133
Break-Even61 months (5.1 years)
Savings in 7 years$11,167
Net Savings$3,167

Get AI-Powered Analysis

Get personalized advice on buying mortgage points.

1. Key Takeaways

  • โ€ข Points = bet on staying long enough
  • โ€ข Calculate break-even first
  • โ€ข Points may be tax deductible
  • โ€ข Longer stay = more savings

2. What Are Discount Points?

Fees paid at closing for lower rate. 1 point = 1% of loan, typically -0.25% rate.

Buy When

  • โ€ข Staying 5+ years
  • โ€ข Have cash
  • โ€ข Past break-even

Skip When

  • โ€ข Moving in 3-4 years
  • โ€ข Cash tight
  • โ€ข May refi soon

3. How It Works

1 pt = 1% of loan. Each pt โ‰ˆ -0.25% rate. Break-even = points cost รท monthly savings.

4. Expert Tips

Estimate stay

How long in home?

Break-even

Use this calculator

Negotiate

Points and rates

Tax advisor

Deductibility varies

5. Points Impact $400K @ 7%

PointsCostNew RateBreak-Even
0$07.00%-
1$4,0006.75%~5 yr
2$8,0006.50%~5 yr
3$12,0006.25%~5 yr

6. FAQ

How many points? Compare break-even to expected stay.
Negotiable? Yes. Shop lenders.
No-cost mortgage? Higher rate, lender pays some costs.
Tax deduction? Purchase points often deductible; refi points over loan life.

7. Quick Stats

1%

= 1 point

0.25%

typical/point

5 yr

typical break-even

IRS

tax rules

8. Sources

IRS Publication 936 (mortgage interest); CFPB; lender rate sheets.

9. Disclaimer

Estimates only. Actual terms vary by lender. Consult tax advisor.

For educational and informational purposes only. Verify with a qualified professional.

๐Ÿ’ก Money Facts

1%

= 1 point

โ€” Cost

0.25%

per point

โ€” Rate

5 yr

break-even

โ€” Typical

๐Ÿ‘ˆ START HERE
โฌ…๏ธJump in and explore the concept!
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