RefinanceCalculatorTools

Refinance Points Calculator

Work out whether buying down the rate on a refinance pays for itself, and how long that takes.

Last reviewed

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Free · No sign-up · Runs in your browser

Points on a refinance carry an extra risk that points on a purchase do not: you have already demonstrated a willingness to refinance. If rates fall again, the points paid on this refinance are lost when you refinance the next time.

This calculator gives the break-even in months so that risk can be weighed. Beyond the break-even the buydown is a saving; before it, it is a loss.

Your numbers

Results update as you type. Nothing is sent anywhere.

Result

Payments to break even

65 months

Monthly saving

$46

Break-even
5.4 years
Cost of points
$3,000
Payment without points
$1,798
Payment with points
$1,752
Saving if held to term
$12,607

You recover the 3000 paid for points after 65 payments. Selling or refinancing before then loses money on the points.

Points are usually tax-relevant in the year paid. Rules differ by country and situation - check with a tax professional.

How to use the refinance points calculator

  1. Enter the loan amount being refinanced and the term.
  2. Enter the rate offered without points and the rate with them.
  3. Enter the number of points being charged.
  4. Compare the break-even against how long you expect to keep this loan.

What people use this for

  • Deciding whether to buy points on a refinance.
  • Comparing a lender credit against a rate buydown.
  • Testing how long you would need to keep the loan for points to pay off.
  • Choosing between points and simply reducing the balance.

Worked examples

Every figure below is produced by running this calculator against the example inputs, so the numbers always match the tool.

One point on a refinance

$300,000 over 28 years, 5.75% without points against 5.5% with one point.

Payments to break even
65 months
Monthly saving
$46
Cost of points
$3,000

Two points for a larger reduction

The same refinance with two points buying the rate down to 5.1%.

Break-even
4.3 years
Cost of points
$6,000
Saving if held to term
$34,179

Points on a refinance are a repeated bet

Every refinance resets the amortisation and re-charges closing costs. Anyone who has refinanced once is statistically more likely to do it again, and each buydown paid is forfeited at the next one.

That makes a short break-even more important on a refinance than on a purchase. Under two years is a reasonable bet; five is a long commitment to rates never falling further.

The alternative use for the same cash

The money spent on points could instead reduce the balance being refinanced. That produces a guaranteed reduction in interest, is not lost if you refinance again, and lowers the loan-to-value which may improve the rate anyway.

Neither is universally better. The point is that points are one option for the cash rather than the only one, and the comparison is worth running.

Methodology and assumptions

What this calculator does, and what it deliberately does not do.

  • Points cost is the percentage applied to the loan amount. Monthly saving is the difference between the two payments.
  • Break-even divides the cost by the monthly saving; lifetime saving assumes the loan runs its full term.
  • Tax treatment of points on a refinance differs from a purchase in many jurisdictions and is not modelled.
  • Results are estimates. Real quotes depend on credit, income, property, loan programme and lender pricing at the time of application.
  • Nothing you type is transmitted or stored - the calculation runs entirely inside your browser.

This calculator is provided for informational and educational purposes only. Results are estimates and may not reflect actual rates, fees, taxes, or market conditions.

This website is not a lender, a mortgage broker or a financial adviser. It does not originate loans, does not accept applications and does not forward your details to anyone.

Actual loan terms depend on credit history, income, the property, the loan programme and lender pricing at the time of application. Only a lender can tell you what you qualify for.

Frequently asked questions

Are refinance points treated the same as purchase points for tax?

Frequently not - many jurisdictions require points on a refinance to be spread across the loan term rather than deducted at once. This is a question for a tax professional.

What is a lender credit?

The opposite of points: the lender pays some closing costs in exchange for a higher rate. Model it by comparing the higher rate against the costs saved.

Should I buy points if I plan to stay forever?

The longer you stay the better points look. Just be honest about "forever" - the median holding period is far shorter than most borrowers expect.

Can I negotiate the number of points?

The rate-to-points relationship is set by the lender’s pricing, but the mix is usually your choice. Ask for the full grid rather than a single option.

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