Mortgage Points Calculator
Should I Buy Points?
Calculate if buying mortgage points saves you money
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Formula
Point Cost = Loan Amount × (Points / 100) | New Rate = Original Rate − (Points × Rate Reduction) | Break Even = Point Cost / Monthly Savings
Frequently Asked Questions
What are mortgage points?
Mortgage points (discount points) are upfront fees paid to the lender to reduce your interest rate. One point costs 1% of the loan amount and typically reduces the rate by 0.125-0.25%. For a $300,000 loan, 1 point costs $3,000.
Is it worth buying mortgage points?
It depends on how long you'll keep the loan. Calculate the break-even point (cost of points / monthly savings). If you'll stay past the break-even, points save money. If you might sell or refinance within a few years, skip the points.
Are mortgage points tax deductible?
Mortgage points are generally tax deductible. Points paid on a purchase loan are usually deductible in the year paid. Points on a refinance must be amortized over the loan term. Consult a tax advisor for your specific situation.
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