Should I Invest in Mortgage Points?

Points. Mortgage points. Discount points. Buying down your rate. It all means the same thing.

Simply put, mortgage points are the opportunity to buy down your interest rate in small increments, which can save you a ton of money in interest over the life of your loan. And now, some math. One mortgage point will cost you 1% of your loan amount. For example, on a $300,000 loan, each point will cost you $3,000, which you will pay at closing. Each point will lower your interest rate by one-eighth of a percentage. You’re lowering your interest rate in small increments, which may not seem significant, but it can add up to substantial savings over time.

So, the big question is… is it worth it? Keep in mind that it will take time to break even on your initial investment, and the longer you stay in the home, the bigger the savings. But if you’re not sure how long you’ll be there, or you’re really looking at this home as a 5-year situation, allow me to present an alternative use for those funds. You might want to think about adding it to your downpayment to reduce your mortgage balance right off the bat. That’s a great way to lower your monthly payment, increase your equity, and still save in interest.

Everyone’s situation is different, so if you have questions about whether or not buying points would make sense for you, that’s what we’re here for. Please don’t hesitate to reach out with any questions you may have. Visit to find a Homespire Loan Officer near you.