Mortgage Points Calculator
Calculate if buying mortgage points is worth it. See your break-even point, monthly savings, and compare total costs with and without points.
Loan Details
Your Situation
Break-Even
(2.6 years)
✓ Points Are Worth It
You'll save $7,167 over 7 years after recouping the points cost.
Payment Comparison
| Without Points | With Points | Difference | |
|---|---|---|---|
| Interest Rate | 7% | 6.5% | -0.500% |
| Monthly Payment | $2,661 | $2,528 | -$133 |
| Upfront Cost | $0 | $4,000 | +$4,000 |
| Total Interest | $558,036 | $510,178 | -$47,858 |
Tax Benefit
Points are tax-deductible in the year of purchase. At your 24% tax rate, you save $960 in taxes.
Effective points cost: $3,040
Effective break-even: 23 months
Savings by Years in Home
| Years | Net Savings | Worth It? |
|---|---|---|
| 3 years | $786 | ✓ Yes |
| 5 years | $3,976 | ✓ Yes |
| 7 years | $7,167 | ✓ Yes |
| 10 years | $11,953 | ✓ Yes |
| 15 years | $19,929 | ✓ Yes |
| 30 years | $43,858 | ✓ Yes |
Points Comparison (Estimated)
| Points | Cost | Rate | Monthly Savings | Break-Even |
|---|---|---|---|---|
| 0.5 | $2,000 | 6.88% | $33 | 60 mo |
| 1 | $4,000 | 6.75% | $67 | 60 mo |
| 1.5 | $6,000 | 6.63% | $100 | 61 mo |
| 2 | $8,000 | 6.50% | $133 | 61 mo |
| 2.5 | $10,000 | 6.38% | $166 | 61 mo |
| 3 | $12,000 | 6.25% | $198 | 61 mo |
*Assumes 0.25% rate reduction per point (actual may vary)
Understanding Mortgage Points
What Are Points?
Mortgage points are upfront fees paid to lower your interest rate. One point = 1% of loan amount. Each point typically reduces your rate by 0.25% (varies by lender).
When Points Make Sense
Points are worth it if you'll stay past the break-even point. Generally good if: staying 5+ years, have cash available, and want lower monthly payments.
Tax Deductibility
Points on a primary residence purchase are fully deductible in the year paid. Refinance points must be deducted over the loan term. Must itemize to benefit.
Frequently Asked Questions
Points Quick Reference
| Points | Cost ($400K loan) | Typical Rate Reduction |
|---|---|---|
| 0.5 | $2,000 | ~0.125% |
| 1.0 | $4,000 | ~0.25% |
| 1.5 | $6,000 | ~0.375% |
| 2.0 | $8,000 | ~0.50% |
When Points Make Sense
- You'll stay past the break-even point (usually 4-7 years)
- You have extra cash for closing
- You want lower monthly payments
- You're in a high tax bracket (deduction benefit)
When to Skip Points
- You might move or refinance within 5 years
- Cash is tight for closing/down payment
- You'd rather invest the money elsewhere
- You don't itemize deductions
Break-Even Formula
Break-Even Months = Points Cost ÷ Monthly Savings
Example: $4,000 points ÷ $100/month savings = 40 months (3.3 years)