Points
Should I Buy Points? Break-Even Calculator
See how many months it takes for a lower rate bought with discount points to pay back its cost, and whether that beats how long you expect to keep the loan.
Break-even51 months (4.2 years)You keep the loan past break-even: points pay off on these numbers.
- Upfront cost of points
- $5,625
- Monthly saving
- $112
- Net over 7 years
- $3,772Savings minus the upfront cost, before the interest the cash could have earned elsewhere.
How the math works
- 1
Price the points
Multiply the loan amount by the points as a percentage. That is the cash paid at closing.
- 2
Find the monthly saving
Compute the 30-year payment at both rates; the difference is what the lower rate saves each month.
- 3
Divide cost by saving
The result is the number of months until the points have paid for themselves.
- 4
Compare with your plans
If you will sell or refinance before that month, the points cost more than they return.
Worked example with the starting figures above: break-even 51 months (4.2 years); upfront cost of points $5,625; monthly saving $112; net over 7 years $3,772. Rates are illustrative examples, not a quote.