Mortgage Points Calculator

Determine if buying discount points will save you money on your mortgage

Loan Details

Loan Amount ($)

Loan Term (years) 15 years 20 years 30 years

Original Interest Rate (%)

Points Options

Points Purchased

(1 point = 1% of loan amount)

Rate Reduction Per Point (%)

Other Closing Costs ($)

Years You Plan to Stay in Home 7 years

Points Analysis

Cost of Points

-

Upfront cost to buy points

New Interest Rate

-

After points discount

Break-Even Period

-

Months to recoup points cost

Cost vs. Savings Comparison

Metric	Without Points	With Points	Difference
Interest Rate	-	-	-
Monthly Payment	-	-	-
Total Interest Paid	-	-	-
Total Cost Over X Years	-	-	-

Recommendation

Calculate to see if buying points makes financial sense for you.

About Mortgage Points

What Are Points?

Discount points are upfront fees paid to lower your interest rate.

1 point = 1% of your loan amount.

Each point typically reduces your rate by 0.25% (varies by lender).

Points are paid at closing and may be tax-deductible.

When to Buy Points

Consider buying points if:

• You'll stay in the home beyond the break-even period

• You have extra cash and want lower monthly payments

• Rates are expected to rise (refinancing later would cost more)

Avoid points if: You may move or refinance soon

This calculator provides estimates only. Consult a financial advisor for personalized advice. Print Results

1. Introduction

A Mortgage Points Calculator helps you determine whether paying discount points (upfront fees) to lower your mortgage interest rate makes financial sense. This tool calculates:

• Break-even period (when savings exceed cost)

• Total interest savings over loan life

• Monthly payment impact

• Long-term cost/benefit analysis

2. Key Mortgage Points Concepts

What Are Mortgage Points?

Type	Description	Typical Cost	Effect
Discount Points	Lower interest rate	1% of loan amount	0.25% rate reduction per point
Origination Points	Lender fees	0.5%-1.5% of loan	Doesn't lower rate

2024 Average Rates with Points

Points Paid	Rate Reduction	Example Rate (From 7%)
0	0%	7.00%
1	0.25%	6.75%
2	0.50%	6.50%
3	0.75%	6.25%

3. Calculator Inputs Needed

Input	Description	Example Values
Loan Amount	Principal borrowed	$300,000
Current Rate	Offered interest rate	7.00%
Points Cost	% of loan per point	1% ($3,000/point)
Points Purchased	Number of discount points	0-3
Loan Term	Mortgage duration	30 years
Planned Ownership	Years you'll keep home	5-30 years

4. Calculation Formulas

A. Break-Even Formula

Break-Even (Months) = (Points Cost) ÷ (Monthly Payment Savings)

B. Total Savings Calculation

1. Calculate total interest without points

2. Calculate total interest with points

3. Subtract points cost from interest difference

5. Example Calculation

Scenario:

• Loan: $400,000

• Base Rate: 6.75%

• 1 Point Cost: $4,000 (1%)

• Rate Reduction: 0.25% per point

• Term: 30 years

• Plan to stay: 10 years

Results:

1. Monthly Payment:

   • No points: $2,594

   • 1 point (6.5%): $2,528

   • Monthly Savings: $66

2. Break-Even:

   • $4,000 ÷ $66 = 60.6 months (~5 years)

3. 10-Year Savings:

   • Total savings: $7,920 (120 × $66)

   • Minus points cost: $3,920 net saved

6. When Points Make Sense

✅ Good If:	❌ Avoid If:
Staying beyond break-even	Selling before break-even
Have extra cash at closing	Tight on closing funds
High interest environment	May refinance soon
Long-term homeowner	Uncertain future plans