Mortgage Points Calculator (Buy Down Break-Even)

How discount points work

Break-even months = Points cost ÷ Monthly payment saving

One point on a $320,000 loan costs $3,200 and (at the typical 0.25% reduction) trims the rate from 6.75% to 6.50% — saving about $53/month. Break-even lands around month 61: keep the loan 8 years and you net roughly $1,900; sell or refinance at year 3 and the points were a loss.

When points make sense — and when they hide tricks

• Long, certain stays win: forever-home buyers with stable rates ahead benefit most.
• Falling-rate environments lose: if you might refinance within ~5 years, points bought at closing evaporate.
• Compare apples: lenders sometimes advertise low rates that quietly include points. Always compare offers at zero points first, then decide on points separately.
• Alternative use of the cash: $3,200 extra down payment also shrinks the payment and builds equity with zero break-even risk — the honest competing option.

Points are usually tax-deductible as prepaid mortgage interest on a primary home purchase (spread over the loan for refinances) — a modest sweetener, not a decider.