Enrichment · Life Skills · Home

Points cost money
today. See when
they pay it back.

Type the loan and the rate options on your Loan Estimate. The calculator prices each option’s points, finds the month the lower payment pays them back, and shows where each leaves you by the time you expect to move.

Compare pointsWhat you get

The points calculator

The worked example is made up: a $320,000, 30-year loan at 6.75% with no points, against half a point, one point and two points. Nothing you type leaves this browser.

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What you get

Enrichment · Life SkillsFree

What you finish with
For each option with points, its cost, the payment, the monthly saving, the break-even month and whether you are ahead or behind after the years you keep the loan, ranked. It prints as a one-page summary and downloads as a spreadsheet.
Who it is for
Home buyers and families comparing Loan Estimates, and personal finance students learning how points work.
Format
Browser calculator for a phone, tablet or computer, by touch or keyboard. Up to five options. Prints a summary; downloads a spreadsheet (.csv); export and import a file.
Access
Free. No account, no sign-in and nothing to install. Everything you type stays in this browser; nothing is sent to Caveat.
Where it lives
The Life Skills space in Caveat Enrichment.
Support
Questions, a correction or a request: team@caveatacademic.com.

How to use it

  1. Type the loan amount, the term and the rate with no points.
  2. Add each option with its points and the rate it buys, from your Loan Estimates.
  3. Type how many years you expect to keep the loan before selling or refinancing.
  4. Read the break-even month and the position after those years.
  5. Print the summary or download the spreadsheet.

Compare points

How the options are compared

Behind by the points on day one, then catching up.

Ahead or behind against no points, month by month$0+$10k−$6.4k0.5 pt1 pt2 ptsyear 7closingyear 10Ahead or behind, by month$0+$10k−$6.4k0.5 pt1 pt2 ptsyear 7closingyear 10
Every option starts behind by the cost of its points and climbs as the lower payment and faster paydown add up. By year 7 one point is $2,431 ahead and two points $4,851.

The arithmetic

Each point costs 1% of the loan. Payments use the standard fixed-rate formula. The simple break-even divides the cost of the points by the monthly saving. The fuller comparison adds, for each choice, everything paid by the time you expect to leave plus the balance still owed then; a lower rate also pays the balance down a little faster, so the fuller comparison usually breaks even a little sooner than the simple one.

Deciding

Points make sense when you expect to keep the loan well past the break-even and have the cash at closing without draining your emergency savings. If you might sell, refinance when rates fall, or need the money for the move, paying no points keeps your options open. Lenders price points differently, so compare Loan Estimates from more than one lender on the same day.

Sources

  1. Consumer Financial Protection Bureau. What are (discount) points and lender credits and how do they work? (consumerfinance.gov/ask-cfpb): one point is 1% of the loan amount.
  2. Consumer Financial Protection Bureau. Loan Estimate explainer: where points appear (section A, origination charges).
  3. Internal Revenue Service, Publication 936, Home Mortgage Interest Deduction: when points are deductible.
  4. Board of Governors of the Federal Reserve System. A Consumer’s Guide to Mortgage Settlement Costs: points and closing costs.

The worked example is made up. Principal and interest only; lenders’ figures can differ by cents. This is not tax advice. Your figures stay in this browser. Support: team@caveatacademic.com.