Mortgage points break-even
Discount points lower your rate in exchange for cash at closing. This shows how long the lower payment takes to repay that cash.
Ignores the interest your cash could earn elsewhere and any tax treatment of points. Ask a tax professional whether points are deductible for you.
Break-even
60 months
$54.06 lower payment each month for $3,200 upfront (about 5.0 years).
- Payment without points$2,189.48
- Payment with points$2,135.42
- Upfront cost$3,200
If you sell or refinance before the break-even point, the points cost more than they saved.
How this is calculated
Monthly saving = payment at the rate without points − payment at the rate with points, both using the standard amortization formula on the same loan amount and term.
Break-even = cost of the points ÷ monthly saving, rounded up to whole months. One point costs 1% of the loan amount.
If you expect to sell or refinance before the break-even month, paying points loses money.