Mortgage rates are still hovering near 6.5% for a 30-year fixed loan, and lenders are pitching discount points harder than ever.
Pay a little extra upfront, the pitch goes, and you lock in a lower rate for the life of the loan.
A discount point costs 1% of your loan amount and typically shaves about 0.25% off your interest rate.
On a $400,000 mortgage, that's $4,000 upfront to drop from 6.5% to roughly 6.25%.
Your monthly principal and interest payment falls from about $2,528 to $2,463 — a savings of $65 a month.
Divide that $4,000 by $65 and you get 61 months.
That's your break-even point: just over five years before the upfront cost pays for itself.
Sell, refinance, or move before then and you've handed the lender free money.
Lenders know most buyers don't run this calculation.
A 2024 study from the Consumer Financial Protection Bureau found that borrowers frequently pay for points without understanding the trade-off, and that shopping just three lenders can save thousands over the life of a loan.
The gap between the best and worst offer on the same day is often 0.5% or more — far bigger than what a single point buys you.
The decision hinges on one question: how long will you actually keep this loan?
The average American homeowner now stays in their home about 12 years, but the average mortgage lasts far less because people refinance or sell.
If rates drop to 5.5% in two years, you'll refinance and your points evaporate.
That $4,000 could wipe out a credit card balance charging 22% interest, fund an emergency account, or cover closing costs on a cheaper loan.
Paying down high-interest debt beats buying points nearly every time.
When points do make sense: you're certain you'll stay put for at least seven to ten years, you have cash beyond your emergency fund, and you're not chasing a lower payment you can't afford anyway.
Buying points to qualify for a house you can barely swing is a warning sign, not a strategy.
One more move worth making: ask your lender for a no-points quote and a one-point quote side by side, in writing.
Then get the same two quotes from a credit union and an online broker.
The spread between offers is where real savings hide — not in the fine print of a buydown.
Closing thought: points aren't a scam, but they're sold like one-size-fits-all when they're anything but.
Run your own break-even math, shop at least three lenders, and treat every upfront dollar like it's competing for a job.
Final Thoughts
If the numbers don't clear your time horizon, keep your cash and take the higher rate.