Mortgage Points Calculator

One mortgage point equals 1% of your loan amount paid upfront at closing. Each point typically reduces your interest rate by 0.25% (though this varies by lender and market conditions). It's essentially prepaying interest for a lower rate.

Break-even = Cost of points ÷ Monthly savings. Example: $4,000 in points saves $80/month = 50-month break-even. If you stay beyond 50 months, buying points was a smart financial move.

Yes! Points paid on a home purchase are generally fully deductible in the year paid (if you itemize). For refinances, the deduction is amortized over the loan life. Consult a tax advisor for your situation.

Buying points makes sense if: (1) you plan to stay in the home past the break-even point, (2) you have cash available that wouldn't earn more elsewhere, and (3) you won't refinance before break-even. Avoid points if you may move or refi within a few years.

Discount points are prepaid interest that lowers your rate. Origination points (or origination fees) are lender compensation for processing your loan. Both cost 1% of loan per point but serve different purposes. This calculator covers discount points only.