Mortgage Points Calculator

What this calculator does

The Mortgage Points Calculator evaluates the cost of paying discount points and the potential interest savings from receiving a lower mortgage rate. It can help estimate how long it may take for the upfront cost to recover through lower monthly payments.

How to use the calculator step by step

Enter the loan amount, cost or number of points, original interest rate, reduced rate, and term if requested. Compare the upfront points cost with the monthly payment reduction and expected time you plan to keep the mortgage.

How the calculation works

One mortgage point commonly represents 1% of the loan amount. The break-even period is approximately the upfront cost of points divided by the monthly payment savings generated by the lower rate.

Worked example and scenario testing

On a 300,000 mortgage, one point would commonly cost 3,000. If paying that point reduces the mortgage payment by 60 per month, the simple break-even period is about 50 months.

How to interpret your result

Points may be more attractive when the monthly savings continue well beyond the break-even period. They may provide little benefit if the home is sold or the mortgage refinanced before that point.

Accuracy, assumptions, and limitations

The calculation may not include tax treatment, opportunity cost of the upfront cash, other lender fees, changing refinance opportunities, or differences in loan structure.

Common mistakes to avoid

Do not assume that paying points automatically saves money. The holding period matters, and different lenders can attach different rate reductions to the same number of points.

Privacy and browser-based calculations

Use only loan and pricing assumptions. Do not enter mortgage account numbers, credit information, or personal identifiers.

Frequently asked questions