Mortgage Points Calculator
Decide if buying mortgage discount points makes sense. Calculates break-even, monthly savings, and whether points are worth the cost.
Total mortgage amount
Annual interest rate
Mortgage term
Each point = 1% of loan = 0.25% rate reduction
Cost per discount point
Typically 0.25% per point (industry standard)
How to show the payoff analysis
What are mortgage discount points?
Discount points (or mortgage points) are upfront fees paid at closing to reduce your interest rate. One point equals 1% of your loan amount and typically reduces your rate by 0.25%. On a $300,000 loan, 2 points = $6,000 upfront and reduces your rate by 0.5%. Each point costs 1% of the loan.
Are mortgage points worth it?
Points are worth it if you save more in interest than you pay for the points. Calculate the break-even: $6,000 cost / $75/month savings = 80 months (6.7 years). If you keep the loan 30 years, you save $21,000 in interest. Points are NOT worth it if you'll sell or refinance before break-even.
What is the difference between discount points and origination points?
Discount points (or mortgage points) reduce your interest rate - they're negotiable and optional. Origination points are fees for getting the loan - they're how lenders make money. Origination points on average are 0.5-1% of the loan. Always ask for a loan estimate with point costs clearly broken down.
How do I decide whether to pay points?
Consider: How long will you keep this loan? If 7+ years, points usually pay off. What's your break-even time? The shorter the better. Do you have cash for upfront costs? Points add to closing costs. Is your rate already good? Points matter less if you have a great rate. Generally, pay points only if you plan to stay long-term.