Your scenario
One point equals 1% of the loan amount. Estimates for education only; you enter your own rates. No MortgageQuote.com rate is quoted or implied.
Break-even on points
What discount points are
Discount points are an upfront fee you can pay at closing to lower your interest rate for the life of the loan. One point equals one percent of the loan amount. Paying points is sometimes called "buying down" the rate. Because it costs money now to save money each month, the key question is how long it takes for the monthly savings to recover the upfront cost, your break-even point.
When points make sense
Points tend to favor borrowers who will keep the loan well beyond the break-even point, since that is when the accumulated savings exceed the upfront cost. If you might sell or refinance before then, paying points is less likely to pay off. This tool estimates the cost, the monthly savings, and the break-even so you can decide with your own numbers.
Points are different from a temporary buydown
Discount points lower your rate permanently for the full term. A temporary buydown lowers your rate only for the first year or two. If you are comparing options, our points article and buydown calculator can help clarify the difference.
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