Should you pay discount points or take a higher rate?
What is this? The "note rate" is the interest rate on your mortgage. The "discount rate" is what you pay upfront (in points) to LOWER the note rate. 1 point = 1% of your loan amount. This calculator determines whether paying points actually saves you money over the life of the loan.
The trade-off: Paying 2 points ($7,000 on a $350K loan) might lower your rate from 7.5% to 7.0%. You need to stay in the home long enough to recoup that $7,000 through lower monthly payments.
Who it's for: Home buyers deciding between paying points or accepting a higher rate with no upfront cost.
Loan Parameters
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Decision Analysis
Points Cost
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Rate With Points
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Monthly Savings
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Break-Even
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Net After Yrs
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Verdict
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Consult your lender for exact rate reductions available on your loan program.