Mortgage Rate vs Points Calculator Guide for Cost Analysis (2026)
Calculate mortgage rate vs points trade-off: break-even analysis, interest savings, and decision criteria for buying discount points.
Summary
Points reduce rate but cost upfront. This guide explains break-even calculation, savings analysis, and buy vs skip decision.
Key Steps
- 1Understand point cost: 1 point = 1% of loan amount ($4,000 on $400K loan).
- 2Calculate rate reduction: typically 0.25% rate reduction per point purchased.
- 3Compute break-even: point cost ÷ monthly savings = months to recoup investment.
- 4Compare to loan term: only buy points if break-even < expected time in home.
- 5Consider tax deduction: points deductible on purchase, amortized on refinance.