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Should you buy points? Buying points when you close your mortgage can reduce its interest rate, which in turn reduces your monthly payment. But each "point" will cost you 1% of your mortgage balance. This calculator helps you determine if you should pay for points, or use the money to increase your down payment.
Definitions
- Term
- Number of years for this mortgage. Most common terms
are 15 years and 30 years.
- Mortgage amount
- Total balance for your mortgage. This calculation assumes that the cost of buying points is financed. The loan amount with points will be higher than the loan without points by the cost of the purchased points.
- Interest rate
- Annual interest rate for this mortgage without purchasing any discount points.
- Years in home
- The number of years you expect to live in this home or the number of years before you refinance your mortgage.
- Principal and interest
- Monthly principal and interest (PI) for this mortgage.
- Points rate
- Annual interest rate for this mortgage with discount points.
- Points
- The number of discount points you need to receive the lower rate. Each point costs 1% of your mortgage amount.
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