Mortgage rates hovering near 6.5% have revived an old debate at the kitchen table: should you pay points to buy down your rate, or take the no-points option and keep the cash?
With the median home price still above $400,000, the gap between those two choices can run into thousands of dollars either way.
One discount point costs 1% of your loan amount and typically shaves about 0.25% off your interest rate.
On a $350,000 loan, one point runs $3,500 and might drop a 6.5% rate to roughly 6.25%.
Your monthly principal-and-interest payment falls by about $55.
That means you'd need to stay in the home roughly five years just to break even on the upfront cost.
The catch is that most Americans don't stay that long.
The average homeowner has historically moved or refinanced within seven to ten years, but life events—job changes, growing families, divorce—often shorten that window.
Sell or refinance at year three and the points become a straight loss.
You keep the $3,500, get a slightly higher rate, and preserve flexibility.
That cash can cover closing costs, moving trucks, or a cushion for the first year of homeownership, which is when surprise expenses tend to pile up.
For buyers stretching to hit a down payment, no points is often the only realistic path.
There's a third option many shoppers overlook: lender credits.
Instead of paying points, you accept a higher rate in exchange for the lender covering some closing costs.
It's the mirror image of buying points, and it can make sense if you're cash-tight or plan to refinance when rates eventually ease.
If you expect to refinance in two or three years when the Federal Reserve finally cuts, paying points now is a bet against your own future behavior.
You'd be paying upfront for a rate you plan to abandon.
Ask your loan officer for a side-by-side Loan Estimate showing both scenarios—same loan amount, same down payment, one with points and one without.
Then divide the upfront cost of the points by the monthly savings.
If you're confident you'll stay past that date, points can pay off.
Some lenders quote points as a percentage of the loan but bury them in a vague "origination charge." Others advertise a low rate that quietly assumes you're paying two points.
Always compare the annual percentage rate (APR), which folds points and fees into one number, alongside the base rate.
Also remember that points on a primary residence are generally tax-deductible in the year you pay them, while points on a refinance usually must be deducted over the loan's life.
That can tilt the math slightly, but it shouldn't drive the decision on its own.
Our take: for most buyers in today's market, no points wins by default.
The break-even timelines are long, rates are expected to drift lower eventually, and cash in hand beats a marginally smaller payment.
Paying points makes sense mainly for buyers who are certain they'll stay put for a decade and have money they don't need elsewhere.
Final Thoughts
Run your own numbers before letting anyone talk you into writing a bigger check at closing.