Mortgage Points Cash Savings Calculator
Compare cash-paid mortgage points using a supplied rate quote. See payment savings over a chosen period, attainable cost recovery and full-term net savings.
What This Calculator Does
Enter two compatible fixed-rate loan scenarios with the same principal and term: without points and with a cash-paid points package. The calculator uses your supplied package rate, not a standard discount per point. Chosen-period cash savings and full-term interest savings are separate results.
Who Is This For
Borrowers comparing U.S. mortgage points quotes in dollars, with the same principal, amortization term and otherwise matching costs.
How It Works
Enter all six facts explicitly, including the package rate and whole-month evaluation period. Confirm that points are paid in cash and other costs match or are excluded. Read the counted payments, recovery status and both full-term savings figures before using the result.
Frequently Asked Questions
What does one mortgage discount point cost?
One point costs 1% of the borrowed principal before cent rounding. For example, 2 points on a $400,000 loan cost $8,000 in cash. That says nothing about the rate benefit: enter the rate supplied for the selected package. The supported 0–4 point range is a calculation bound, not a legal maximum.
Does each point reduce the rate by 0.25 percentage points?
No fixed reduction is assumed. Lender pricing can differ by package, so the quoted rate is a required input. A change from 6.5% to 6% is 0.5 percentage points, not a 0.5% relative reduction. These numbers are examples, not current rates or available offers. With 0 points, the quoted rate must match the base rate.
Can I add the points cost to my mortgage?
Not in this model. It holds the loan principal unchanged and pays points separately in cash. The cash charge is principal × points ÷ 100, rounded once to cents with half a cent rounded up. Financing the fee changes principal and payments, so it needs a different compatible comparison.
Are savings over my chosen period the interest I save before selling?
No. They are the accumulated difference in principal-and-interest cash payments, minus the upfront points charge for the net result. Remaining principal can differ between the two loans. Sale proceeds, equity, early payoff, refinancing costs, taxes and the time value of money are not included.
When is the cost of points recovered?
At the first scheduled month-end within the loan term when unrounded payment savings reach the cash charge. For a hypothetical $400,000 loan over 30 years, 2 points and rates of 6.5% versus 6%, recovery is month 62. At 60 months, cash savings after the $8,000 charge are still about −$195.80. Equality recovers cost; it is not profit.
Why might no recovery month be shown even with a lower payment?
The savings can be too small to recover the fee before payments end. For example, a hypothetical $400,000 ten-year loan with 1 point and rates of 6.5% versus 6.375% saves about $25.40 monthly, or $3,047.88 over 120 payments, less than the $4,000 fee. Month 158 is not attainable on that loan. No cash fee has a separate status: recovery 0 means nothing to recover, not instant profit.
What if my evaluation period extends beyond the loan term?
Counted payments stop at the loan's scheduled payoff. A ten-year loan contributes at most 120 payments, even if you enter 600 months. Full-term interest savings use the full scheduled payment count before points cost; the separate full-term net figure deducts that cash charge once. A rounded display of zero does not establish exact equality.
Which costs and decisions are outside this calculator?
Other loan fees, lender credits, differing mortgage insurance and escrow are not modeled. Keep them identical or explicitly outside the comparison; if they differ, use the quoted loan comparison. This is not APR, total loan cost, an approval decision, a tax-deductibility assessment or a guaranteed return. Review the actual quotes and any early-payoff plan separately.