Should You Pay Points to Buy Down Your Rate?
I know that we all start our research online. You’ll see very attractive low rates, but those numbers often come with a catch—2 or 3 “discount points” tied to them. The big question: Should you pay points now to get a lower rate? Sometimes yes. Sometimes no. Here’s how to think it through:
First, What Are Points?
Discount points = an upfront fee (e.g. 1 point = 1% of your loan) that lowers your interest rate.
In other words, you’re “prepaying” interest to secure a smaller monthly payment.
Pros & Cons
Pros |
Cons |
| Lowers your monthly payment immediately | Higher cash required at closing |
| Reduces total interest if you keep the loan long enough | Break-even could take years |
| Can sometimes help you qualify – lower payment = lower Debt to Income ratio (DTI) | If you sell or refinance early, you may not recover the cost |
The Quick Break-Even Test
- Find the cost of points
- Find the monthly savings (with-points vs. no-points)
- Divide: Cost ÷ Monthly Savings = Break-even months
If you’ll keep the loan longer than that break-even period → paying points may make sense.
Pro Tips
- If a seller or builder is offering to cover your closing costs, using that credit for points can be a sharp move.
- But if you expect to refinance in the near future, skip the points—you won’t see the payoff.
Bottom Line
Paying points can be a smart strategy—but only if the math works for your situation. Want me to run your break-even? I’ll compare both options side by side so you can see the numbers clearly.
The BankSouth Mortgage Advantage
Experience the speed of ReadyApprove from BankSouth Mortgage, where you can secure conditional approval for conforming loan limits within hours.
With ReadyLoan®, you can make this process even easier. Our digital platform lets you apply, track your loan progress, and submit documents securely—all from your computer or mobile device. You’ll be armed with the confidence to quickly submit an offer, and the seller will see you as a serious, prepared buyer.
Have peace of mind with our FREE one-time rate float-down* and no lender fee refinance options!
When you purchase your home with me at BankSouth Mortgage, you may be able to refinance later with no lender fees.** This program offers flexibility as life changes, with the potential for savings when it matters most.
* One-time float down available on 45-120 day rate locks. Float down must be executed at least 15 days prior to closing and must be at least .125 improvement. ** This offer may change or end at any time without notice. “No Lender Fees” refers to waived origination charges. Eligibility conditions apply. Subject to credit and property approval.
Blog post date: Thursday, August 28, 2025
