How Points Work
Each mortgage point costs 1% of your loan amount and typically reduces your interest rate by 0.25%. Buying points upfront can significantly reduce lifetime interest costs.
The Payoff Timeline
Calculate your break-even point. If you plan to stay 5+ years, buying points usually makes sense. For shorter holds, the upfront cost rarely justifies the savings.
Market Dependent
When rates are high, buying points becomes more attractive. During low-rate environments, the benefit diminishes. Run the numbers with your lender to make informed decisions.
