Mortgage Points Calculator
Comprehensive analysis tool to determine if buying mortgage points makes financial sense. Compare scenarios, break-even analysis, and strategic recommendations.
How it works
This calculator performs comprehensive analysis of mortgage points scenarios, comparing upfront costs with long-term savings to determine optimal financing strategy.
Example
$400K loan at 6.5% base rate: 1 point costs $4,000, reduces rate to 6.25%, saves $60/month. Break-even at 67 months if you stay 7+ years.
FAQ
What are mortgage points?
Mortgage points (discount points) are fees paid upfront to reduce your interest rate. One point typically costs 1% of the loan amount and reduces the rate by 0.125-0.25%.
When should I buy points?
Points make sense if you'll stay in the home long enough to break even, typically 5-7+ years. Consider your cash flow, alternative investments, and refinancing likelihood.
Are points tax deductible?
Points are generally deductible in the year paid for home purchases, but must be amortized over the loan term for refinances. Consult your tax advisor.
What if I refinance early?
You lose the benefit of points if you refinance before breaking even. The calculator considers this risk in its recommendations.
How do seller-paid points work?
Seller-paid points reduce your rate without costing you money upfront, making them almost always beneficial. They're often negotiated as part of the purchase agreement.