Mortgage Point Calculator

The mortage point calculator on this page helps you decide whether to pay a point for your loan. By helping you understand what your monthly savings can be from a reduced interest rate and how many years it will take to recoup the original cost of the point through these monthly savings, you can decide if paying points for your loan is right for you.  (Learn more)

A Loan Discount Point, also called 'Point' or 'Mortgage Point', is a percentage of your loan principal that you pay as a fee to your bank in return for a lower (discounted) loan interest rate. This fee is paid to your bank as part of your closing costs when you first get your mortgage and is non-refundable. This lower interest rate reduces your monthly mortgage payment  to help you more easily afford your payment and may help you more easily qualify for a loan.

Because the fee to reduce your loan interest rate is a percentage of your loan principal, paying points can often be very expensive. However, because paying points reduces your loan’s interest rate, it can save you thousands of dollars in interest over the life of your loan.

Loan Amount:
Original Interest Rate:
Interest Rate With Points:
Mortgage Point Calculator

THIS SUMMARY PROVIDES ESTIMATES ONLY . Before making any home or loan purchase decision, you should obtain the advice of a professional financial advisor who is aware of your individual circumstances. Please refer to the Terms Of Use  for a complete description of the proper use of this information.

Understanding Your Results

Paying Discount Points: This chart demonstrates how much paying points will cost you, how much you will save each month on your mortgage payment by reducing your loan’s interest rate through paying points, and how these savings add up cumulatively over the life of your loan.

Blue Columns: The blue columns in the chart show the years where your total cumulative savings have not added up to recoup the cost of your points. If you plan to sell your home during these years, you will lose money and paying points to reduce your interest rate is not a good idea.

Gold Column: The gold column in the chart shows which year you will recoup the original cost of your point through your monthly savings. If you sell your home during this year, you will generally break even between the cost of your point and your cumulative savings. Paying a point to reduce your interest rate would not have made any real difference in your savings and is not a good idea.

Green Columns: The green columns show the years that your total cumulative savings are much greater than the original amount you paid for your point. Paying a point is a good idea and will save you a substantial amount of money if you are planning to keep your home through these years.

Total Savings: When holding your mouse over a column, ‘Total Savings’ shows the cumulative amount you will save through that year by paying points on you loan.


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