Rate Optimization
Should I Buy Mortgage Points?
Calculate your exact break-even point to see if paying cash upfront to lower your interest rate is mathematically worth it.
Loan Details
This is the crucial variable. If you sell before the break-even, you lose money.
Standard Rate (No Points)
Discounted Rate (Buying Points)
Typically, 1 point costs 1% of the loan amount and lowers the rate by ~0.25%.
The Winner (Over 7 Years)
BUY THE POINTS
Saves you $10,091 in total net cost if you sell in 7 years.
The Math
Standard Rate
Monthly Payment
$2,661
Upfront Point Cost
$0
Discount Rate
Monthly Payment
$2,528
Upfront Point Cost
-$4,000
The Break-Even Point: You are spending $4,000 today to save $133 every month.
It will take exactly 31 months (2.5 years) to recover the upfront cost.
If you sell or refinance before 2.5 years, buying points was a mathematical loss.