Spring is one of the busiest seasons in real estate, and if you're planning to buy a home or refinance your current mortgage, you're likely exploring ways to secure the best possible loan terms. One option you may come across is mortgage points—a lesser-known tool that can actually help you save money over the life of your loan.

This month, we’re taking a closer look at what mortgage points are, how they work, and when it might make sense to buy them.

What Are Mortgage Points?

Mortgage points—also called discount points—are essentially a form of prepaid interest. When you purchase points, you pay an upfront fee to lower the interest rate on your mortgage. This can result in a lower monthly payment and significant savings over the long term.

Each point typically costs 1% of your loan amount and generally lowers your interest rate by about 0.25%, though that reduction can vary depending on your lender, loan type, and the broader interest rate environment.

Think of mortgage points as a way to “buy down” your rate. You’re paying more at the beginning in exchange for savings down the road.

How Do Mortgage Points Work?

Let’s look at a simple example.

Suppose you’re taking out a $200,000 mortgage:

• One point would cost $2,000 (1% of $200,000).
• If your interest rate without points is 6.5%, buying one point might reduce it to 6.25%.
• Over a 30-year term, that lower rate could save you over $11,000 in total interest.

Here’s a side-by-side comparison:

While these savings may not seem massive on a monthly basis, they add up significantly over time. And for some buyers, even a slightly lower monthly payment can make a big difference in budgeting.

Is Buying Mortgage Points Always a Good Idea?

Not necessarily. Whether purchasing points makes sense depends on your individual situation and long-term plans. Here are a few key questions to ask yourself:

1. How long do you plan to stay in the home?

Mortgage points are most beneficial if you plan to stay put for several years. That’s because it takes time to “break even” on the upfront cost. If you sell or refinance before reaching that breakeven point, you may not fully realize the savings.

2. Do you have the funds available at closing?

Points are paid upfront at closing, on top of your down payment and other fees. If you’re already stretching your budget, it might not make sense to put more cash toward points.

3. Are you trying to lower your monthly payments?

If your goal is to reduce your monthly expenses and you have some flexibility with your closing costs, purchasing points could be a helpful strategy.

4. Are current interest rates higher than you'd like?

Buying down your rate with points can offer peace of mind if you’re locking in a long-term loan during a period of higher rates.

Let Consumers National Bank Guide You

Choosing whether or not to buy mortgage points is a personal decision—and one that’s best made with a clear understanding of your options. That’s where we come in.

At Consumers National Bank, our experienced Mortgage Specialists are here to walk you through every detail of the home financing process. We’ll help you compare mortgage scenarios, estimate your breakeven timeline, and determine whether points make sense for your goals.

We’re committed to helping you make informed, confident decisions—whether you’re buying your first home, refinancing, or simply exploring your options.

Ready to crunch the numbers and see how mortgage points could work for you?
Contact your local Mortgage Specialist at Consumers National Bank today. We’re here to help you save money—and feel great about your mortgage decision.