How this calculator works
One point costs 1% of the original mortgage amount. Enter the actual quoted rate for each points offer; there is no assumed rate reduction per point. Cash points are paid upfront. Financed points enlarge the mortgage and accrue interest. Simple cash break-even divides upfront cost by monthly payment saving; it ignores investment returns, taxes and the outstanding balance at an early sale. Lifetime savings assume the loan is held to full amortization.
Formula
Points cost = original loan × points / 100. Financed balance = original loan + financed points cost. Payment A = P × i / (1 - (1 + i)^(-N)). Monthly saving = no-points payment - offer payment. Simple cash break-even = ceiling(upfront points cost / monthly saving), when saving > 0.
Worked example
On a $1,200 loan, one point costs $12. At 0% over twelve months, paying those points in cash leaves $100 monthly P&I and $1,212 total cost. Financing two points raises borrowing to $1,224 and P&I to $102 when the rate also remains 0%.
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Frequently asked questions
Does one point always reduce the rate by 0.25%?
No. The trade-off depends on the lender and offer. Enter the quoted rate rather than assuming a fixed discount.
Can financed points show a lower payment?
Yes, if the lower quoted rate more than offsets the larger loan. Compare total payments and remaining balance before deciding.
What if break-even is after I expect to move?
The simple recovery period suggests the upfront cash may not be recovered through monthly savings during your holding period. A balance-aware comparison may differ.