09/22/2026
Would you pay more today to save a lot more later? 🤔
Think of mortgage points as prepaying some interest upfront to get a lower interest rate.
Different lenders offer different pricing for points.
It’s not always:
1% of the loan = 0.25% rate reduction
Sometimes you may find:
1% of the loan = 0.50% rate reduction
‼️ When 1 point lowers the rate by about 0.25%, the break-even point is usually around 5 years
Example:
$600,000 loan | 30 years
At 7%:
Monthly principal + interest ≈ $3,992
Buy 4 points = $24,000
and lower the rate to about 6%
New payment ≈ $3,597
That saves about $400/month.
👉 Break-even: about 5 years
Over 30 years, the lower rate saves about $142,000 in payments.
After subtracting the $24,000 cost of the points, that’s about $118,000 in net savings.
So if you expect to keep the mortgage for more than about 5 years, paying points may make sense.
‼️ And remember: you have the right to shop around. I always encourage buyers to compare lenders, rates, points, and fees to find the best terms for their situation.
