Mortgage rates have been bouncing around 6% to 7% for months, and lenders are pushing hard on a familiar pitch: pay extra upfront, lock in a lower rate.
One 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, say, 6.75% to roughly 6.5%.
Divide that $4,000 by $65 and you get roughly 61 months — a little over five years — before you break even.
Sell, refinance, or move before then and you've handed the lender thousands of dollars for nothing.
Nearly 70% of outstanding mortgages carry rates below 5%, according to industry data, and millions of homeowners are sitting on equity they'd like to use.
If you're buying with the intent to refinance when rates dip, points are a bet against your own plan.
You'd pay for a lower rate now and then pay closing costs again to replace it.
If you're putting down permanent roots — a forever home, a 30-year horizon, no plans to move — buying points can save real money over time.
On a $400,000 loan held the full term, dropping half a percentage point could save well over $40,000 in interest.
There's also a tax angle some buyers miss.
Points paid on a mortgage used to buy or build your primary residence are generally deductible in the year you pay them, subject to IRS rules.
That softens the upfront hit for itemizers, though the standard deduction is high enough that many households won't benefit.
The smarter move for most buyers right now: skip the points and put that cash toward the down payment, an emergency fund, or paying down higher-interest debt like credit cards.
A bigger down payment cuts your loan balance immediately and permanently, with no break-even clock attached.
If you do want to compare offers, ask each lender for two quotes — one with points, one without — on the same loan amount and term.
Then ask yourself one blunt question: will I still be in this house in six years?
If the answer is anything short of a confident yes, keep your cash.
One more thing worth knowing: seller-paid points are negotiable.
In a market where homes are sitting longer in many metros, asking the seller to cover a point can get you the lower rate without writing the check yourself.
Our take: points are a tool, not a default.
In a high-rate, high-mobility market, paying thousands upfront to save $65 a month is a gamble most buyers don't need to take.
Final Thoughts
Run your own break-even number before anyone talks you into it — and if a lender won't show you the math, that's your answer.