Mortgage Points Break-Even Calculator
Mortgage points are fees paid at closing to lower the interest rate. This page shows how many months of lower payments it takes to earn back that fee.
- Free
- Works offline after your first visit
- Saves on this device
- No sign-up
- Updated
How it works
Each point costs a percent of the loan. The payment is worked out twice, once at the normal rate and once at the lower rate. The difference is the monthly saving, and the cost divided by that saving gives the months to break even.
If you sell or refinance before that many months, the points may not pay back what they cost. Lenders quote points and rate cuts in different ways, so use the figures from your own quote.
Worked example
Paying $3,000.00 in points on a $300,000.00 loan lowers the payment by $49.59 a month. That earns back the cost in 61 months.
Questions
What is a point?
One point is one percent of the loan amount. Some lenders offer a smaller rate in return for paying points.
Does the break-even include taxes?
No. It counts only the difference in the payment. Any tax effect of mortgage interest is left out.
How long will I keep the loan?
That matters most. Compare how long you expect to keep the loan with the break-even month before you decide.
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