Mortgage Points Calculator

For tips on using the mortgage points calculator, click here.

Is it worth it to pay points on a mortgage?

By calculating your break-even point, our mortgage points calculator determines if buying points pays off. The break-even point is when you’ve paid off the cost of buying the points. From then on, you’ll enjoy the savings from your lower interest rate.

To find the break-even point, the calculator determines your monthly savings from buying points and divides the total cost of the points by that amount. For example:

On a $300,000 loan with a 7% interest rate, purchasing one point brings the mortgage rate to 6.755%, dropping the monthly payment from $1,996 to $1,946 — a monthly savings of $50. The cost: $3,000. The calculator divides the cost by the monthly savings amount to find the break-even point.

$3,000/$50 = 60 months (5 years)

So is buying points worth it? The answer starts with determining how long you plan to stay in the home and whether you'll hit the break-even point. But you should also consider your personal financial goals. Perhaps you'd rather use that money for other purposes, like making a larger down payment or paying for home repairs. An alternative goal doesn't have to be housing-related; for example, maybe you want to invest those funds instead of buying points.

Keep in mind that, in a buyer's market, the seller may offer to pay some or all of your mortgage points. Talk to your real estate agent to find out if this might be possible.

» MORE: How large should your down payment be?

Buying points could be helpful if:

• You have enough cash to make your desired down payment and still have some left for lowering the rate.

• You expect to keep the loan long enough that you’ll exceed the break-even point (meaning you won't move or refinance within a given time frame).

• You're trying to reduce the size of your monthly mortgage payment.

But buying points might not be the best move if:

• You plan to sell the home or refinance before you’ve hit your break-even point.

• You need the cash you’d use to buy points for something else.

• The monthly savings are so small that it doesn’t make a meaningful dent in your budget (even if you reach the break-even point).

Another case when you might reconsider buying points: You'll hit the break-even point, but it won't be for a long time. Given how long it will take you to enjoy the savings from buying points, you may decide you're better off using the money you would have spent on points elsewhere.