Deciding whether or not to pay discount points to drive your mortgage rate lower is a problem many borrowers face. This calculator takes in the potential mortgage rate drop from a paying a set amount of discount points, then outputs the savings and time period to recoup the cost of paying those discount points.

Once you see the recoup period, you can decide whether you'll be in the mortgage long enough to benefit from paying discount points. A good rule of thumb (and one used in the "built in" calculator scenario below) is to estimate a .25% drop in rate for every 1 discount point paid. So 2 points paid would take a rate from 6.5% down to 6.0% or 5.25% down to 4.75% for example.

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Instructions: Starting with the first line of entry fields, change the values in each one to suit your scenario. Hit "Calculate" to move forward.

The results will allow you to see the monthly payment with the "Original Rate" and the rate "With Discount Points", the monthly savings and recoup time in months.

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