Mortgage Points Buydown Break-Even
Is paying upfront points worth it? The break-even depends on how long you stay, and what that cash would earn if invested instead.
$
%
%
% of loan
yrs
%
Points Cost
$3,500
1 point × 1% of loan
Monthly Payment Savings
$87.01
per month with lower rate
Break-Even
Month 41
3yr 5mo
Net Benefit if You Stay
$2,346
after 84 months (incl. opportunity cost)
Net Benefit at Various Horizons
| Months in Home | Cumulative Savings | Opportunity Cost | Net Benefit | Worth it? |
|---|---|---|---|---|
| 12 mo (1yr) | $1,044 | $179 | -$2,635 | ✗ No |
| 24 mo (2yr) | $2,088 | $367 | -$1,779 | ✗ No |
| 36 mo (3yr) | $3,132 | $565 | -$933 | ✗ No |
| 48 mo (4yr) | $4,177 | $773 | -$97 | ✗ No |
| 60 mo (5yr) | $5,221 | $992 | +$729 | ✓ Yes |
| 84 mo (7yr) | $7,309 | $1,463 | +$2,346 | ✓ Yes |
| 120 mo (10yr) | $10,442 | $2,265 | +$4,677 | ✓ Yes |
| 180 mo (15yr) | $15,662 | $3,898 | +$8,264 | ✓ Yes |
Points are a bet on staying in the home long enough to recoup the upfront cost. If you sell or refinance before break-even, you lose the points. The opportunity cost of investing those dollars makes break-even later than the simple payback period suggests.