Answers · Points
Are mortgage points worth it?
Updated November 2026 · All math shown, every dollar figure is an exampleOnly if you will keep the loan longer than the break-even month: what the points cost, divided by what they save you each month. Illustrative example: two points on a $380,000 loan cost $7,600; if they drop the rate from 6.625% to 6.125%, they save about $124 a month and break even in about 61 months, just over five years. Sell or refinance before then and the points cost you more than they saved.
What points are
Points (also called discount points) are interest you pay up front, at closing, in exchange for a lower rate for the life of the loan. One point is 1% of the loan amount, so one point on a $380,000 loan is $3,800. On your Loan Estimate, the three-page form a lender gives you within three business days of your application, points appear in Section A as a line like "1% of Loan Amount (Points)."
A common rule of thumb is that one point lowers the rate by about a quarter of a percent. In practice it varies by lender and by day, and each extra point often buys a little less than the last one. The only number that counts is the one on your own estimate.
Lender credits are the same deal, backwards
A lender credit is the reverse of points: you accept a higher rate, and in return the lender pays some of your closing costs. It shows up as a negative line, "Lender Credits," just under Total Closing Costs on page 2. Paying points moves cost from your monthly payment to closing day. Taking a credit moves it from closing day to your monthly payment. Neither is free money. The question for both is the same: how long will you keep this loan?
The break-even math
$7,600 ÷ $124 ≈ 61 months
Keep the loan past month 61 and every month after is money the points earned you. Pay the loan off before then, by selling or refinancing, and you never got your $7,600 back.
The worked example (illustrative)
A $380,000, 30-year fixed loan. The rates and the point pricing are made up to show the math, and they assume each point buys the same quarter point, which real pricing often does not.
| Choice | Rate | Up front | Monthly P&I | Vs no points | Break-even |
|---|---|---|---|---|---|
| Lender credit | 6.875% | lender pays $3,800 | $2,496 | +$63/mo | credit used up at ~60 months |
| No points | 6.625% | $0 | $2,433 | — | — |
| 1 point | 6.375% | $3,800 | $2,371 | −$62/mo | ~61 months |
| 2 points | 6.125% | $7,600 | $2,309 | −$124/mo | ~61 months |
Read the credit row from the other side: the lender hands you $3,800 at closing, and you hand it back at $63 a month. By month 60 you have paid it all back, and from then on the higher rate just costs you. Stay ten years and the credit cost about $3,800 more than it gave. Move at year three and it was a gift.
Put your own numbers in the breakeven calculator: the "closing costs" slider works for points too.
When points tend to make sense
- You will stay well past break-even. Seven or more years in the home with no plan to refinance is the usual case.
- The buy-down is generous. If a point buys a full quarter point or more, the break-even is shorter. If it buys an eighth, it is twice as long.
- You have the cash and nothing better to do with it. Points compete with paying down the loan, keeping an emergency fund, or putting more down to avoid mortgage insurance.
When they tend not to
- You might move or refinance within five years. Most break-evens on points land somewhere around four to seven years. A refinance pays off the old loan, and the points go with it.
- Cash at closing is tight. A thin cushion after closing costs more than a slightly higher payment.
- The points hide a worse base price. One lender's "6.125%" with two points can be the same deal as another lender's 6.625% with none. Compare on the same points, or compare the "In 5 Years" box on page 3. How to compare two Loan Estimates walks through it.
Questions people ask
Are points the same as the origination fee?
No, though both sit in Section A. Points are prepaid interest and lower your rate. The origination fee is what the lender charges for making the loan, and it does not change your rate. Some lenders call that fee "origination points," which is a fee by another name. Read the lines, not the labels. More in What's a normal origination fee?
Are points tax-deductible?
Often, because they are interest, but the rules differ between buying a home and refinancing, and they depend on your own situation. A tax professional can tell you what applies to you; this page cannot.
Do I get my points back if I refinance?
No. Points buy a lower rate on that one loan. When it is paid off, whatever the points had not yet saved you is gone. That is why the break-even month matters more than the size of the rate cut.
Not sure the points on your quote are priced fairly?
Tell us the rate and points you were quoted. It is free, there is no credit pull, and nobody calls you. We check whether another lender beats the same deal on the same points. The free Loan Estimate checker reads your estimate first and flags what to look at.
Check my quoteFigures are illustrative principal-and-interest math at the stated rates and terms; they exclude taxes, insurance, and PMI, and are not a loan offer, approval, commitment to lend, or Loan Estimate. Point pricing varies by lender and by day. Nothing here is tax or financial advice. comparemyloan does not negotiate with lenders, lock rates, or take loan applications.