Mortgage Points Break-Even Calculator

One discount point costs 1% of your loan amount, paid to the lender at closing, in exchange for a permanently lower interest rate on the loan — on a $300,000 mortgage, one point costs $3,000. The exact rate reduction per point varies by lender and market conditions, typically somewhere around a quarter of a percentage point, which is why this calculator asks for the actual quoted rates rather than assuming a fixed relationship.

You come out behind — the upfront cost of the points hasn't yet been recovered through lower monthly payments, so selling or refinancing early effectively wastes the difference between what you paid for the points and the savings you actually collected before the loan ended. This is the single biggest reason to calculate break-even before paying for points rather than after.

They can be if the cash used to buy points would earn a better return invested elsewhere, or if you'd rather keep that cash liquid for emergencies or a larger down payment that avoids mortgage insurance altogether. A long expected holding period makes the interest-rate math favor points, but it doesn't automatically make points the best use of that specific cash on hand.

Generally more worthwhile on a pure interest-savings basis, since a lower rate compounds its benefit over more months of remaining payments, while the break-even point itself is driven mainly by the size of the monthly savings rather than the total term length. A 30-year loan gives a rate reduction far more time to pay off its own upfront cost than a 15-year loan does.