Mortgage rates have cooled from their 2023 peaks, but they're still high enough that buyers are hunting for any way to shrink the monthly payment.
That's why lender ads pushing "buy down your rate" keep showing up in your inbox.
The pitch sounds simple: hand over some cash at closing, get a lower rate for the life of the loan.
Whether it actually saves you money depends on a few numbers most people never run.
Mortgage points, sometimes called discount points, are upfront fees you pay to the lender in exchange for a lower interest rate.
One point typically costs 1% of your loan amount and shaves roughly 0.25% off your rate, though the exact trade-off varies by lender and day.
On a $400,000 loan, one point runs you $4,000.
The number that matters is your break-even point.
Say you're choosing between a 6.5% rate with no points and a 6.25% rate after paying one point.
On a $400,000 loan, that lower rate saves you about $60 a month.
Divide your $4,000 cost by $60, and you're looking at roughly 67 months — about five and a half years — before you've recouped a single dollar.
That timeline is where the decision lives or dies.
If you sell or refinance before you hit break-even, you lose money on the deal.
Most homeowners stay in their homes for years, but "most" isn't "you." A job move, a growing family, or a refinance when rates drop all reset the clock.
Paying points makes the most sense when you plan to stay put for the long haul and you have the cash sitting in a savings account earning little.
It can also help if you're trying to qualify for a specific monthly payment on a tight budget.
What it doesn't do is make sense as a default choice just because a lender dangles a lower rate in front of you.
There's a second option worth knowing about: lender credits.
That's the reverse move — you accept a slightly higher rate, and the lender covers some of your closing costs.
If money is tight now and you expect to refinance within a few years, credits can be the smarter play even though they cost more over time.
One more wrinkle: points are generally tax-deductible in the year you pay them on a purchase mortgage, which softens the upfront sting a bit.
Ask your tax preparer before counting on it.
And always compare loan estimates from at least three lenders side by side, since points pricing is not standardized and some quotes bury the cost in the fine print.
The bottom line: run your own break-even math before anyone talks you into writing a bigger check at closing.
If the number of months to break even is longer than you honestly expect to keep the loan, keep your cash and take the higher rate.
Final Thoughts
The best mortgage is the one that fits your actual life, not the one with the prettiest rate on the flyer.