Free mortgage points calculator from Fynvorax. See break-even timing and lifetime savings when buying discount points to lower your rate.
One discount point = 1% of loan amount upfront to buy down rate. On $300,000, one point = $3,000. Worth it if you keep the loan past break-even months vs payment saved.
Discount points are upfront fees paid directly to the lender at closing in exchange for a permanently reduced interest rate on your loan. They are essentially prepaid long-term interest.
Selling or refinancing before reaching the break-even years means you lose money because the upfront cost paid to get the lower rate was higher than the interest saved.
Months ≈ points cost ÷ monthly payment savings. If one point costs $3,000 and saves $55/month, ~55 months.
Often as prepaid interest on purchase loans (U.S.) subject to limits; rules vary — confirm with a tax pro.