Question 1

How many points can I buy on a mortgage?

Accepted Answer

Lenders have caps on how many Mortgage Points you can buy. The typical range is 0 to 3 points.

Question 2

How much is 1 mortgage point worth?

Accepted Answer

The cost of 1 mortgage point approx. = 1% of the total mortgage amount.

On average, 1 mortgage point is worth a 0.25% reduction in your mortgage interest rate, but this reduction in interest rate can vary depending on your lender, offers, incentives, or individual circumstance.

Question 3

How can mortgage points be beneficial?

Accepted Answer

Buying points can serve a number of purposes. While you pay more upfront, points can be worthwhile if you need to lower your monthly costs; if you’d like your tax deduction upfront; or if you plan on keeping your home long-term.

Question 4

Do Mortgage Points reduce the principal?

Accepted Answer

No, mortgage points do not reduce or have any effect on the principal amount of your loan. Mortgage points only affect the mortgage interest rate.

Question 5

Can you buy Mortgage Points on an Adjustable Rate Mortgage (ARM)?

Accepted Answer

Yes, but the Discount Points you buy will only apply to the initial fixed rate period which can be 5-10 years so it's extra important to pay attention to your break-even point.

Question 6

Are Mortgage Discount Points tax deductible?

Accepted Answer

Discount points are tax deductible; Origination Points are fees, so they are not.

points on a mortgage

Mortgage Points: What Are Points On a Mortgage?