Mortgage Points Calculator
Find out whether paying discount points for a lower rate pays off, and how long it takes to break even
Loan Options
Until you sell or refinance
1 point = 1% of the loan
From your lender's quote
Points save you over 7 years
$6,064
You break even after 4 yr, counting payment savings and the faster paydown
Cost of the points
$8,000
paid at closing
Monthly savings
$131.52
$2,462.87 instead of $2,594.39
Simple break-even
5 yr 1 mo
cost ÷ monthly savings
Interest saved over the full term
$47,348
if you keep the loan 30 years
Net savings from buying points
Payment savings plus the lower balance, minus the cost of points
What you pay over 7 years
Interest while you keep the loan, plus the points
Net Savings by Year
| After | Net Savings | Paid Off? |
|---|---|---|
| 1 year | -$5,998 | Not yet |
| 2 years | -$3,990 | Not yet |
| 3 years | -$1,980 | Not yet |
| 4 years | $33 | Yes |
| 5 years | $2,045 | Yes |
| 6 years | $4,056 | Yes |
| 7 years | $6,064 | Yes |
| 8 years | $8,064 | Yes |
| 9 years | $10,056 | Yes |
| 10 years | $12,036 | Yes |
| 15 years | $21,615 | Yes |
| 20 years | $30,160 | Yes |
| 25 years | $36,632 | Yes |
| 30 years | $39,348 | Yes |
What Are Discount Points?
A discount point is a fee of 1% of the loan paid at closing to lower the interest rate, often by around 0.25 percentage points per point, though it varies by lender. Points pay off only if you keep the loan long enough for the lower payments to outweigh the upfront cost, so the key question is how long you expect to stay before selling or refinancing.
The Formulas
Cost = points × 1% × loan
Simple break-even = cost ÷ monthly savings
Net = savings × months + balance difference − cost
Counting the balance difference credits the faster paydown of the lower-rate loan.
Deciding on Points
- •Ask lenders for quotes with and without points to compare
- •Points rarely pay off if you might move or refinance within a few years
- •Compare the APR of each option, which spreads the points over the loan
- •Mortgage points may be tax-deductible; ask a tax adviser
- •Keeping the cash for a bigger down payment can be the better use