Mortgage Points Calculator

One discount point costs 1% of the loan amount and typically reduces your interest rate by 0.125-0.25%. On a $350,000 loan, 1 point = $3,500. The rate reduction varies by lender and market conditions. Points are paid at closing and may be tax-deductible as prepaid mortgage interest.

The key question: how long will you stay in the home? If you sell or refinance before the break-even period, you lose money. If you stay longer, you save money. Rule of thumb: only buy points if you plan to stay in the home for at least 5-7 years AND you have cash for closing costs plus points.

Yes, for primary residences. Discount points paid on a purchase mortgage are typically fully deductible in the year paid. Points on a refinance must be deducted over the life of the loan (amortized). Consult a tax advisor for your specific situation, as rules can be complex.

Break-even = Points cost / Monthly payment savings. Example: 1 point on $350k loan = $3,500 cost; reduces rate 0.25%, saving $57/month. Break-even = $3,500 / $57 = 61 months (~5.1 years). If you stay longer than 5 years, points pay off. Shorter? Skip them.

Yes. You can often negotiate the rate-to-point relationship. Some lenders offer better rate reductions per point. Get quotes from multiple lenders. You can also ask for lender credits (negative points) to reduce closing costs in exchange for a higher rate — the opposite tradeoff if you plan to move soon.