Mortgage Points Calculator for Rate Savings and Break-Even

The mortgage points calculator tests whether paying discount points to lower a note rate is worth the cash due at closing. One point is usually 1% of the loan amount in exchange for a rate reduction, often about 0.25% per point, though lender pricing varies. Enter the loan amount (principal), the quoted rate before points, how many points to buy, the term, the cost of each point as a percent of principal, and the rate reduction per point. The headline result is months to break even. Points cost = principal × points × (cost per point / 100). If cost per point is 1, one point on a $300,000 loan costs $3,000. The new rate is the quoted rate minus points times the reduction per point. Monthly savings is the difference between the original amortized payment and the payment at the new rate, using the standard mortgage formula. Break-even months equal points cost divided by monthly savings. If you keep the loan longer than that, buying points is ahead on a simple cash-flow basis; if you sell or refinance sooner, you may not recoup the fee. Use the mortgage points calculator when a lender offers a rate menu with 0, 1, or 2 points, when comparing a credit-union price with a retail quote, and when a cash-to-close constraint makes points painful even if the break-even looks short. The model does not discount future savings, does not tax-adjust the point deduction, and does not include origination fees that are not points. A 0.25% reduction per point is a planning default, not a market guarantee. If monthly savings is zero or negative—because the reduction is zero—the break-even is undefined or infinite and should be treated as “do not buy points.” Recalculate with the lender’s actual price sheet, and compare break-even months with how long you realistically expect to keep the mortgage. The result is a planning estimate, not a lock confirmation.