Mortgage Points Calculator

If you are considering a new home loan, you may have the option to lower the interest rate you receive by paying mortgage points.

Mortgage points, which sometimes are referred to as discount points, are a fee that you pay at the time you close the loan in exchange for a lower interest rate. Typically, a point costs you 1% of the total amount of your loan. And in exchange, you can receive a reduction of approximately 0.25% on your interest rate.

But is paying points a good idea? It likely depends on the length of time you plan to stay in the home. Money expert Clark Howard advises against paying points unless you’re very confident that you’ll own the home for a long period of time. You can read more about his strategy and the nuances of mortgage points here.

Team Clark’s Mortgage Points Calculator is designed to help you make this decision. Simply input two loan options (starting with the loan with the lowest amount of points, if applicable) and our tool will break down how much money you could save on your payment and how long it will take you to recoup the upfront costs of buying the points.

  • Loan Details

  • This is the amount of the new loan you are considering.
  • This is the length of the loan you are considering - in years.
  • Details on Loan Option 1

  • This is usually a number between 0 and 2. This amount should be lower than the amount on loan 2.
  • Details on Loan Option 2

How This Mortgage Points Calculator Works

This calculator works by comparing two different financing options (points and interest rates) for loans with the same amount and length.

When comparing the loans, enter the loan with fewer or zero points first.

Your Results

The cost (in points) for loan 1 is {{ discountPoints1Amount }}. The cost (in points) for loan 2 is {{ discountPoints2Amount }}. This is a cost difference of {{ discountSpread }}.

The payment amount for loan 1 is {{ monthlyPayment1 }}. The payment amount for loan 2 is {{ monthlyPayment2 }}. This is a payment difference of {{ calc_monthlyPaymentDiff }}.

Based on the difference in your loan payment, it will take {{ breakeven }} months ({{ calc_breakevenYears }} years) to recover the cost of paying points.

In this scenario, it would only be worth paying points if you are sure you are going to be in your home for longer than {{ calc_breakevenYears }} years.

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