Mortgage Points Calculator | HomeMortgage.com

Mortgage Points Calculator

The Mortgage Points Calculator is for those who are looking into buying prepaid mortgage points and are wondering if they will benefit from doing so in the long run. For each point you buy up front, you're paying off 1% of your total mortgage amount, and when a homeowner buys points, home mortgage lenders will lower the monthly interest rate, which can be continually lowered as more points are purchased. For homeowners looking to pay their loan long-term, going with this option is decidedly more viable, as you benefit more from the lowered rate over an extensive period.

How to Figure Out if Points Are for You

In order to figure out if buying points makes sense for your financial situation, and more importantly, whether you can afford to pay for points from the outset, the following information can be logged into the calculator: The loan amount, mortgage loan rates, the interest rate (with points deducted), and mortgage period. By doing this, homeowners-to-be will be able to determine if they'll come out at an advantage. Whether you're looking to buy a new mortgage or refinance your existing loan for better rates, HomeMortgage.com has you covered with a wide collection of valuable tools, mortgage calculators and resources to help homeowners succeed in the housing market.


Input Information
Loan Information
Amount : ($)
Interest Rate : (%)
Interest Rate with Points : (%)
Length : (Yrs)
Additional Information
Points : (%)
Your Savings Rate : (%)
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Financial Analysis (Switch to Plain English)
  Without Points With Points
Amount Financed : $250,000.00 $250,000.00
Monthly Principal & Interests : $1,342.05 $1,266.71
Monthly Payment Savings : $75.34
Points Value : $2,500.00
Monthly Investment Savings : $10.42
True Monthly Savings : $64.92
Break Even : 3 Years 3 Months
Plain English Help (Switch to Financial Analysis)

When applying for a mortgage, you will most likely be presented with the option to pay points to lower your interest rate. In order to determine if this investment is worthwhile for you, you will need to know the amount of your loan, the interest rate before the purchase of points, and the interest rate after the purchase of points. You will also need to know the length of the loan and your savings rate.

If you are taking out a $250,000.00 loan with an interest rate of 5.000%, you might be able to buy down the interest rate to 4.500% with points. If you are getting a 30 year loan and paying for your points, your monthly payment (principal and interest only) will change from $1,342.05 to $1,266.71. This will give you a savings of $75.34.

But, if you put your money in the fund with an average savings rate of 5.000% rather than purchasing points to cut an interest rate of your mortgage loan, you might get $10.42 per month from your investment. When you figure in your investment savings, your true savings will be $64.92 per month.

After considering the cost of paying for the points, you will break even after 3 years and 3 months.

DISCLAIMER: There is NO WARRANTY, expressed or implied, for the accuracy of this information or it's applicability to your financial situation. Please consult your own financial advisor.