How to use a real lender quote
Ask for the same loan priced two ways — with and without points — and enter both rates above. Don't assume the 1-point-per-quarter rule: point pricing varies daily and by lender, and the only honest comparison is the one on your rate sheet. Two structural cautions: if there's a real chance you'll refinance when rates fall, points bought today die at that refinance (check the refinance calculator logic); and points compete with your down payment for the same closing cash — compare against the down payment scenarios before writing the check.
Frequently asked questions
What are mortgage discount points?
Prepaid interest: 1 point costs 1% of the loan and typically buys the rate down ~0.25% (the ratio varies by lender and market — always compare quoted rates, not rules of thumb). On $400,000, one point is $4,000 at closing.
Are mortgage points worth it?
Only if you keep the loan past the break-even month (points cost ÷ monthly savings). Keep it the full term and the savings multiply; sell or refinance early and the points are simply lost. The calculator prints both numbers for your exact quote.
When do points break even?
Commonly 4–7 years for a standard one-point/quarter-point trade. Buying points only makes sense with a long expected stay AND low likelihood of refinancing — a high-rate environment you expect to fall argues against points.
Are points tax deductible?
Purchase-loan points are generally deductible in the year paid if you itemize (refinance points amortize over the loan’s life). Most filers take the standard deduction now, so don’t count on it — confirm with a tax professional.
Points vs. a bigger down payment — which is better?
Same cash, different jobs: a bigger down payment reduces the balance (and maybe PMI), points reduce the rate. At typical pricing, if you might move within ~7 years the down payment usually wins; very long stays can favor points. Run both: this tool and the down payment calculator.
What are negative points (lender credits)?
The same trade in reverse: accept a higher rate, get closing-cost credits. Good for short expected stays or cash-tight closings — model it by entering the higher rate as "without points" and comparing.
Related calculators
- Mortgage Calculator — Estimate your full monthly payment — principal, interest, property taxes, insurance, PMI, and HOA — with a complete amortization schedule.
- Down Payment Calculator — Every tier from 3.5% to 20% compared: cash needed, payment, PMI — and what your savings cover.
- Refinance Calculator — Find your break-even month and lifetime savings before you refinance.
- 15-Year Mortgage Calculator — 15 vs. 30 years side by side: payment difference, interest difference, and equity build.
Disclaimer: Educational purposes only — not financial advice. Point pricing varies by lender and day. See our Terms of Use.