Cost of Points / Monthly Savings = Months to Break Even Scenario (on $300,000 Loan) Without Points With 1 Point ($3,000) Interest Rate Monthly Payment (P&I) Monthly Savings Break-Even Period 60 Months (5 Years) Calculated based on standard industry examples. When It Makes Financial Sense
: One mortgage point typically costs 1% of your total loan amount . For a $400,000 mortgage, one point would cost $4,000.
: If you think you'll refinance soon because market rates are falling, paying for a permanent buydown now is a wasted expense.
: You itemize your deductions. For a primary residence, points are generally 100% tax-deductible in the year you pay them as "prepaid interest". When to Avoid Buying Points