Mortgage lenders love to pitch "buying down" your rate.
Pay a little extra upfront, they say, and you'll save every month for years.
But the math only works if you stick around long enough to break even — and a lot of Americans move, refinance, or sell well before that happens.
A discount point typically costs 1% of your loan amount and shaves roughly 0.25% off your interest rate.
On a $400,000 mortgage, that's $4,000 upfront to drop your rate from, say, 7% to 6.75%.
That means you'd need to stay in the home for roughly 61 months — just over five years — before you're ahead.
Sell or refinance before then and you've handed the lender free money.
The average American homeowner now stays in their home about 12 years, according to data from the National Association of Realtors.
On paper, that sounds like points should pay off.
Rates fall and refinancing becomes tempting.
When you refinance, your original points vanish.
You paid $4,000 to lower a loan you no longer have.
There's also a tax wrinkle worth knowing.
Points on a home purchase are generally deductible in the year you pay them, as long as the loan is secured by your main home and you meet IRS rules.
On a refinance, you usually have to deduct them gradually over the loan's life.
That difference changes the real break-even math for some borrowers.
If you're putting down roots long-term, have cash beyond your emergency fund, and expect to keep the loan past the break-even point, buying down the rate can be a solid move.
It's a guaranteed return in the form of lower payments — something no savings account currently matches.
But if you're stretching to cover closing costs already, points are usually the wrong call.
Draining savings to shave a quarter point can leave you exposed to a single unexpected repair bill.
There's a third option many buyers overlook: lender credits.
That's the reverse trade — accept a slightly higher rate and let the lender cover some closing costs.
If cash is tight or you expect to move within a few years, credits often beat points.
The smartest move is to ask your loan officer for a full loan estimate showing both scenarios side by side.
Compare the total cost over five, seven, and ten years — not just the monthly payment.
The lower payment isn't always the cheaper loan.
Our take: points are a bet on the future, and most buyers don't have the information to place that bet well.
Ask for the break-even number in writing before you sign anything.
Final Thoughts
If a lender can't produce it quickly, that tells you something too.