Rate Reduction Per Point
Understand how much your rate drops per discount point and check the math on your own loan numbers.
Mortgage figures are entered and computed on your device — nothing is sent anywhereTry: Loan amount=300000, Base interest rate=6.5, Discount points to buy=1, Rate drop per point=0.25, Loan term=30, How long you will keep the loan=120 → $3,000.00, 6.250%, $1,896.20, $1,847.15, $49.05, 62 months (5.1 yrs)
How to use
Each point you buy typically reduces the rate by roughly a quarter of a percent. That sounds small, but on a large loan over 30 years it can mean thousands in interest. Enter your own loan numbers to verify the trade-off.
FAQ
How much does one discount point cost?
One point costs 1% of your loan amount. On a $300,000 loan, one point costs $3,000.
How much does my rate drop per point?
A common rule of thumb is about 0.25% per point, but your lender sets the actual buydown schedule. Always read the loan estimate.
Are discount points worth buying?
Only if you keep the loan past the break-even month. The calculator shows that break-even point for your numbers.