Mortgage points, also known as "discount points," are fees paid to the lender at closing in return for a reduced interest rate. As a result of buying points, your monthly mortgage payment is reduced. Each "point" costs you 1% of your mortgage loan balance. So is buying points a good idea?
Use our mortgage points calculator below to figure out whether you should buy discount points. Enter your mortgage loan information, comparing it with and without points. This can help you decide if mortgage points actually will save you money in the long run through a reduced interest rate.
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Mortgage points calculator terms
Term – The time frame for the mortgage loan. The most common terms are 15 years and 30 years.
Mortgage amount – The total amount for your mortgage.
Interest rate – The annual interest rate for the mortgage, without any discount points purchased.
Years in home – The number of years you anticipate living in the home.
Principal and interest – Monthly principal and interest (PI) for the mortgage.
Points rate – Annual interest rate for the mortgage with discount points.
Points – The number of discount points you need to buy in order to receive the lower rate.