Buying mortgage points—also known as —is a strategy where you pay an upfront fee at closing to "buy down" your interest rate. This trade-off trades current cash for long-term savings, potentially reducing your monthly payments and total interest over the life of the loan. How Mortgage Points Work
: You itemize your deductions. For a primary residence, points are generally 100% tax-deductible in the year you pay them as "prepaid interest". When to Avoid Buying Points buying points on mortgage
AI responses may include mistakes. For financial advice, consult a professional. Learn more Everything You Need to Know About Mortgage Discount Points Buying mortgage points—also known as —is a strategy
: You do not expect rates to drop significantly in the near future, which would make refinancing a better (and cheaper) option. For a primary residence, points are generally 100%
Buying points is essentially a long-term investment. It is generally a good idea if:
The cost and impact of points are generally standardized across the industry, though specific offers vary by lender:
: Each point usually reduces your interest rate by 0.25 percentage points (e.g., from 7.00% to 6.75%).