Mortgage rates are still hovering near 6.5% for a 30-year fixed loan, and every lender you call will offer you the same fork in the road: pay points to buy down your rate, or take the higher rate and keep the cash.
A "point" costs 1% of your loan amount and typically shaves about 0.25% off your interest rate.
On a $400,000 mortgage, one point runs you $4,000 upfront and might drop your rate from 6.5% to 6.25%.
Divide $4,000 by $58 and you land at about 69 months — nearly six years — before you break even.
That breakeven number is the whole ballgame, and it's the number lenders tend to glide past.
If you sell, refinance, or die before month 69, you handed the bank thousands of dollars for nothing.
The average American homeowner now stays in a home for about 10 to 12 years, but that's an average — plenty of people move in three.
Points are paid with after-tax dollars, but mortgage interest is often deductible if you itemize.
Paying points lowers your interest, which lowers your deduction, which stretches the breakeven even further.
Most filers take the standard deduction anyway, so this cuts both ways — but it's a real variable nobody mentions at the closing table.
That $4,000 in points is $4,000 you can't put toward your down payment, an emergency fund, or the credit card balance charging 22% interest.
Paying off a 22% card is a guaranteed, tax-free return that no mortgage buydown can touch.
If you're carrying revolving debt, points are usually the wrong move.
When points actually make sense: you have a fully funded emergency fund, zero high-interest debt, and you're certain you'll stay put well past the breakeven date.
Even then, ask for the "par rate" and compare it against at least three lenders, because point pricing varies wildly.
Some lenders quote a discount point that's barely a discount.
One more trap — "no points" doesn't mean free.
Lenders often roll costs into a slightly higher rate or tack on origination fees.
Always compare the APR, not just the rate, and demand a full Loan Estimate within three business days.
That document is required by federal law, and it's the only apples-to-apples comparison you'll get.
For most buyers in 2025, keeping the cash and taking the higher rate is the safer play, especially with rates expected to drift lower.
Our take: points are a bet on your own patience and stability, and the house always wins ties.
Unless you're certain you'll stay put for seven-plus years and your finances are otherwise airtight, keep your money liquid and your options open.
Final Thoughts
The best mortgage is the one you can still afford when life doesn't go according to plan.