One point
One point generally equals 1% of the loan amount. The rate reduction received for that cost varies with the market and loan.
Mortgage Strategy
What are points, and are they worth it?
Discount points are upfront charges used to obtain a lower interest rate. Whether they are worthwhile depends on cost, monthly savings, timeline, and alternatives.
Find the break-even
Divide the upfront point cost by estimated monthly payment savings to estimate the number of months needed to recover the cost.
Timeline matters
Selling, refinancing, or paying off the loan before break-even can erase the expected benefit.
Compare alternatives
Review no-point pricing, lender credits, temporary buydowns, cash needs, and investment or debt-payoff uses for the same money.
Written by Marta Lillard
25+ years of mortgage experience, explained in plain English.
Mortgage Broker · First Coast Mortgage Funding · NMLS #879436 · Licensed in Florida and Georgia
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