Mortgage points calculator: is buying down your rate worth it?
What does buying down the rate mean?
One discount point costs 1% of the loan amount, paid at closing, and typically lowers the rate by about 0.25% (lenders vary — always price the same loan with and without points). Whether it pays off comes down to one number: the break-even month — how long until the monthly savings have repaid the upfront cost. Keep the loan past break-even and points make money; sell or refinance before it and they were a loss.
When points make sense (and when they don’t)
- Long hold, no refi in sight: points shine when you keep the loan well past break-even — usually 4–7 years in.
- Rates likely to fall: if you expect to refinance soon, points are usually wasted — you reset the clock before they pay off.
- Seller or sponsor concessions: in NYC new developments and slower markets, negotiated credits can pay for points — a rate cut you didn’t fund.
- Cash competition: the same dollars might serve better as down payment if it moves you past 20% equity and kills PMI — check both in the mortgage calculator.
Context: this week’s rates and what your credit score does to them.