12/30/2025
Buying down mortgage points (usually just called “buying points”) is basically paying extra upfront to get a lower interest rate on your loan.
Here’s the idea in plain English:
What is a “point”?
1 point = 1% of the loan amount
If you’re borrowing $300,000:
1 point = $3,000
0.5 points = $1,500
You pay this at closing, not monthly.
What do you get for paying points?
A lower interest rate
That means lower monthly payments over time
Example (simplified):
No points → 7.0% interest
Buy 1 point → 6.75% interest
(Exact discounts vary by lender and market.)
Why would someone do this?
It’s a trade-off:
Pay more now
Save money every month later
This usually makes sense if you plan to keep the mortgage for a long time.
The “break-even” idea (important!)
You want to know how long it takes for your monthly savings to add up to what you paid upfront.
Example:
You pay $3,000 for points
You save $100/month
Break-even = 30 months (2.5 years)
If you sell or refinance before that? You probably lose money.
If you stay longer? You come out ahead.
When buying points usually makes sense
You have extra cash at closing
You plan to stay in the home many years
Interest rates are high and you want to lock in something lower
When it usually doesn’t
You might move or refinance soon
You’re tight on cash upfront
The rate drop is tiny for the cost
One more thing
Points can sometimes be tax-deductible, but rules vary, so people usually check with a tax pro.
