Paying discount points (1 point = 1% of loan balance) reduces your ongoing interest rate by ~0.25%, but requires upfront capital that takes years to recoup.
1. 1 Point Buy-Down ($400,000 Loan) Break-Even Model
Pricing Option
Note Rate (APR)
Upfront Point Cost
Monthly P&I
Break-Even Timeline
Par Rate (Zero Points)
6.75% APR
$0
$2,594 / mo
Baseline
1 Discount Point Buy-Down
6.50% APR
$4,000 upfront
$2,528 / mo (-$66/mo)
60.6 Months (5.05 Years)
2 Discount Points Buy-Down
6.25% APR
$8,000 upfront
$2,462 / mo (-$132/mo)
60.6 Months (5.05 Years)
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Authored by the Home Loan Remortgage Editorial Directorate
Our editorial team comprises seasoned residential mortgage analysts, CFPB compliance specialists, and loan officers. We specialize in break-even refinancing models, home equity release mechanisms, and consumer lending protections.