Is paying discount points worth it when getting a mortgage? Post

Discount points are an upfront cost paid to obtain a lower interest rate.

Whether that makes sense depends largely on the break-even period.

For example, compare:

• The upfront cost
• The monthly savings
• How long it takes to recover the cost
• How long you expect to keep the mortgage
• Whether those funds have a better use elsewhere

Paying points may work well when someone expects to keep the loan long enough to benefit from the lower payment.

It may be less compelling when the borrower expects to sell, refinance, or move before reaching the break-even point.

Also compare borrower-paid points with seller-funded concessions. The economics may look different depending on who provides the money.

Would you pay more upfront for a lower payment, or preserve the cash and accept the higher rate?