Are discount points worth it?
How long until points pay for themselves, and what a temporary buydown costs and saves.
01Permanent buydown (discount points)
02Temporary buydown
▦Temporary buydown schedule
| Period | Effective rate | Payment | Monthly savings | Yearly savings |
|---|---|---|---|---|
| Year 1 | 4.875% | $2,116.83 | $510.88 | $6,131 |
| Year 2 | 5.875% | $2,366.15 | $261.56 | $3,139 |
| Year 3+ | 6.875% | $2,627.72 | $0.00 | $0 |
Subsidy = the total of the payment reductions, usually deposited into an escrow account at closing.
±Trade-offs to weigh
Paying points
- Lower payment for the life of the loan
- Pays off if you keep the loan past break-even
No points
- Keeps cash in your pocket
- Better if you might refinance or sell soon
Neither option is right for everyone. It depends on your timeline, cash and comfort with risk.
ƒHow this is calculated
- Each point costs 1% of the loan. Break-even = cost ÷ monthly savings.
- Net result = payment savings + the slightly lower balance − the cost of the points.
- A temporary buydown lowers the payment only in the early years. You usually qualify at the full note rate.
Estimates for illustration only. This is not a loan offer, rate quote, or commitment to lend. Results come only from the numbers entered above. Interest rates are examples you supply, not advertised rates, so check current rates before deciding. Fee schedules and limits shown are published figures that can change.
This calculator is being provided for educational purposes only. The results are estimates based on information you provided and may not reflect CrossCountry Mortgage, LLC product terms. The information cannot be used by CrossCountry Mortgage, LLC to determine a customer’s eligibility for a specific product or service.
Austin Gerimonte, NMLS #2277430 · CrossCountry Mortgage, LLC NMLS #3029 · Equal Housing Lender · NMLSConsumerAccess.org