What your result means
The break-even period estimates how many months of monthly payment savings are needed to recover the upfront points cost.
Formula and assumptions
Points cost = loan amount × points percentage. Monthly savings = payment at higher rate − payment at lower rate. Break-even months = points cost ÷ monthly savings.
- Both quotes are 30-year fixed loans with the same principal.
- Points are paid in cash and not financed.
- Only principal and interest differ; other fees and credits are excluded.
Worked example
One point on a $320,000 loan costs $3,200. Compare 6.50% without points with 6.25% after points; the result shows how long the monthly savings take to recover $3,200.
Limitations
A quote may combine discount points, origination charges, and lender credits. Tax treatment, APR, financed costs, refinance or sale timing, and different loan features can change the decision.