Quick Answer
Mortgage points are an upfront fee to lower your rate: one point = 1% of the loan and cuts the rate by about 0.25%. On a $300,000 loan, one point costs $3,000, drops 6.5% to ~6.25%, and saves about $49/month — a break-even of roughly 61 months (5 years). Buy points if you'll keep the loan past break-even. Other ways to lower your rate: better credit, bigger down payment, a 15-year term, and shopping at least three lenders.
In a mid-6% rate environment, shaving even a quarter-point off your mortgage matters. Points are the most direct way to do it — but only if the math works for how long you'll stay. Here's how points work and every other lever you can pull.
How mortgage points work
1 point = 1% of your loan, and typically lowers your rate by about 0.25%. It's prepaid interest — you pay more upfront to pay less every month.
The break-even math ($300,000 loan)
Rate without points6.5% → $1,896/mo
Rate with 1 point ($3,000)6.25% → $1,847/mo
Monthly savings$49
Break-even~61 months (5 years)
Keep the loan longer than about five years and the point pays for itself. Plan to sell or refinance sooner, and you'd lose money buying it.
Other ways to lower your rate
- Raise your credit score into a higher tier — often the biggest free win.
- Put more down — a bigger down payment can improve your pricing.
- Choose a 15-year term — shorter loans carry lower rates.
- Shop at least three lenders — rates and fees genuinely differ.
- Ask about a temporary buydown — sometimes seller-paid to ease early payments.
Test points and rates with the mortgage calculator, see the credit connection in mortgage rates by credit score, and weigh terms in 15- vs 30-year.