Mortgage Points Calculator Guide for Home Buyers (2026)
Calculate mortgage points break-even: discount points cost, interest rate reduction, payback period analysis, and when to buy points vs skip.
Summary
Mortgage points reduce interest rate for upfront cost. This guide explains break-even calculation, when points make sense, and tax deduction treatment.
Key Steps
- 1Understand discount points: 1 point = 1% of loan amount, reduces rate 0.25% typically.
- 2Calculate break-even: divide points cost by monthly savings to find months to recoup.
- 3Compare to loan term: points profitable only if break-even < remaining loan years.
- 4Consider tax deduction: points deductible in year paid for purchase, amortized for refinance.
- 5Evaluate alternative use: compare points investment to other uses of funds.