Mortgage Points Explained: Are They Worth Buying?
Updated November 8, 2026
When you get a mortgage quote, you may see an option to pay "points" for a lower rate. Points can save you money or waste it, and the deciding factor is usually how long you keep the loan.
What a point is
One discount point costs 1% of the loan amount, paid at closing. On a $320,000 loan, one point costs $3,200. In return, the lender lowers your interest rate. How much the rate falls varies by lender and by market, so it should be checked on each quote.
Do not confuse these with origination points, which are a lender fee and do not lower your rate. Your Loan Estimate lists each charge separately.
How to find the break-even point
Say one point lowers a 30-year, $320,000 loan from 6.5% to 6.25%:
- Payment at 6.5%: $2,023 per month
- Payment at 6.25%: $1,970 per month
- Monthly savings: about $52
- Break-even: $3,200 ÷ $52.32 = about 62 months, or just over 5 years
In this example, if you keep the loan longer than about five years, the points pay for themselves. If you sell or refinance sooner, you lose money on them.
When points tend to make sense
- You expect to stay in the home and keep this loan for a long time.
- You have cash left over after your down payment, closing costs and emergency fund.
- Rates seem unlikely to fall enough to make you refinance soon.
When to skip them
- You may move within a few years.
- You think you could refinance soon if rates drop. A refinance ends the benefit of the points you paid.
- The cash would be better used on a larger down payment, especially if it helps you reach 20% and avoid PMI.
Lender credits: points in reverse
Some lenders offer a slightly higher rate in exchange for a credit toward your closing costs. This can help if you are short on cash or expect to sell or refinance soon. You pay more each month, so the same break-even math applies in reverse.
How to compare quotes
It is hard to compare offers when one has points and another does not. Ask each lender for a Loan Estimate on the same day and for the same loan amount, and compare the rate, the points and the total closing costs together. Rate quotes can change daily. Points may also be tax-deductible in some cases, so ask a tax professional how that applies to you.
Try the free Mortgage Calculator
This article is general information, not financial, tax, legal or insurance advice. Figures are illustrative examples.