Corie Adams
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Costs

Rate Buy-Down Calculator

Discount points are prepaid interest: you hand over cash at closing to lower your rate for the life of the loan. It's a good trade if you keep the loan long enough.

The same money can often be used differently, a larger down payment, a temporary buydown, or simply staying in your pocket. This shows you the break-even so you can decide deliberately.

Your numbers

$320,000

One point = 1% of the loan amount.

Your results

Net benefit over your horizon

$1,243

7 years

Cost of points
$3,200
Bought-down rate
6.5%
Monthly savings
$53
Break-even
60.5 months
Payment without points
$2,076
Payment with points
$2,023
Lifetime interest saved
$19,043

What happens if you change this

Paying 1 point costs $3,200 and lowers the payment by $53 a month, so you break even after 60.5 months. Keeping the loan 7 years, you come out $1,243 ahead, the points pay for themselves and then some. A seller credit can also cover points, see the seller credit calculator.

Keep these numbers

Your results are yours already. If it helps, send them to yourself, or have Corie look at the same scenario and tell you what she would change.

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Keep learning

Questions people ask

Are points tax deductible?
Points on a primary residence purchase are often deductible in the year paid, and on a refinance they're generally amortized. Confirm with your tax advisor, we don't give tax advice.
What's a temporary buydown?
A structure like 2-1 or 3-2-1 that lowers your rate for the first years only, usually funded by a seller or builder credit. It's a different tool than permanent points.

Estimates for education only, not a loan approval, rate quote, or commitment to lend. Actual figures depend on credit, property, program guidelines, and market conditions at the time of lock. Corie Adams · NMLS #1875205 · Network Funding, LP · NMLS ID #2297 · Equal Housing Opportunity.

In plain English

It tells you whether paying money up front to lower your rate pays for itself.

When to use it

  • You are deciding between points and a seller credit
  • You plan to keep the loan a long time
  • A builder is offering to buy the rate down

Common mistakes

Buying points before a likely refinance
You need to hold the loan past break-even for points to pay off.
Spending reserves on points
Cash in the bank protects you. Cash in a rate does not.
Comparing quotes with different point structures
Put both lenders at the same cost, then compare rates.

Recommended next steps

  1. 01Check the APR effect
  2. 02Talk With Corie

Turn the estimate into real numbers.

A pre-approval replaces the assumptions above with your actual income, credit, and the terms available to you today.

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Other numbers worth running.

After the math

Where this number leads.