Mortgage Points: When Does Buying Down Your Rate Make Sense?

Discount points can lower your mortgage rate and save thousands in interest—but they cost money upfront. Here's how to decide if they're worth it for your Nevada home purchase.

What are mortgage points?

Mortgage discount points (or "points") are optional fees you pay at closing to lower your interest rate. Each point typically costs 1% of your loan amount and reduces your rate by about 0.25%, though this varies by lender and market conditions.

Example: $350,000 Loan in Nevada
Without Points
6.5% Rate
$2,212/month payment
Upfront cost: $0
Total interest: $446,320
With 2 Points ($7,000)
6.0% Rate
$2,098/month payment
Upfront cost: $7,000
Total interest: $405,280
Savings: $41,040
Break-even point: 5 years. After that, you save $114/month for the life of the loan.

When to Buy Points

You plan to stay long-term

If you'll own the home for at least 5-7 years (past the break-even), you'll recoup the upfront cost and save money overall

You have extra cash at closing

If you have savings beyond your down payment and closing costs, using it to buy points can yield better returns than many investments

You want lower monthly payments

A lower rate means less monthly payment—helpful if you're near your debt-to-income (DTI) limit or just want cash flow relief

Rates are high

When mortgage rates are elevated (7%+), buying them down to 6-6.5% can save substantially over 30 years

You're close to qualifying

Sometimes a slightly lower rate can push your DTI below the lender's limit, making you eligible when you otherwise wouldn't be

When to Skip Points

You might move or refinance soon

If there's a chance you'll sell or refi within 3-5 years, you likely won't reach the break-even point. Don't waste money on points you won't benefit from

Cash is tight

If paying points would drain your emergency fund or force you to put less down, skip them. Financial security now > slight savings later

You can invest the money better

If you can earn more than ~6-7% annually in investments (the "return" from buying points), it might be smarter to invest that cash instead

Rates are already low

If you're locking in a sub-6% rate, buying points yields diminishing returns. The savings aren't as dramatic

The seller is paying your closing costs

If you negotiated seller concessions, consider using that money for points. But if you're already at the limit, don't add more out of pocket

How to Calculate if Points Are Worth It

Use this simple formula to determine your break-even point:

Break-Even Formula
Cost of Points ÷ Monthly Savings = Months to Break Even
Step 1: Calculate the cost of points

Example: $350,000 loan × 2 points = $7,000

(Each point = 1% of loan amount)

Step 2: Calculate monthly payment difference
Payment at 6.5% rate: $2,212/month
Payment at 6.0% rate (with points): $2,098/month
Monthly savings: $114/month
Step 3: Divide cost by monthly savings
$7,000 ÷ $114 = 61 months
That's 5 years and 1 month to break even
The Verdict:

If you plan to keep this mortgage for more than 5 years, buying 2 points saves you money. After year 5, you pocket $114/month in savings—that's $41,040 in total interest saved over 30 years.

Get a Custom Points Analysis

We'll show you exact costs and savings for your situation

Common questions about mortgage points

Should you buy points for your Nevada home?

Every situation is different. Our loan officers can run the numbers for your specific loan amount, rate, and timeline to show you exactly when you'd break even and how much you'd save.

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