Should You Pay Points? Points are an upfront cost that some lenders offer in order to take out a mortgage at a lower rate. One point is equal to one percent of the total mortgage amount. For example, 3 points would result in $3000 upfront for a $100000 mortgage. This calculator will tell you whether the reduction in interest rate will wind up saving you money in the end. Principle Balance:    $ Down Payment:    $ Length of Mortgage:      years Interest Rate Without Points:      % Interest Rate With Points:      % # of Points:     Investment Rate of Return:      % * Calculations do not include closing costs, insurance fees or taxes Definitions Principle Balance: The initial amount the mortgage is taken out for. Down Payment: Amount of money that you pay off when you take out the mortgage. This amount gets deducted from the principle balance and does not get charged interest. Length of Mortgage: The number of years you have to pay the money back. Interest Rate Without Points: The cost of borrowing the money the lender offers if you don't pay points. Interest Rate Without Points:     The cost of borrowing the money the lender offers if you do pay points. # of Points: The amount of points the lender offers to reduce the interest rate. Investment Rate of Return: The rate of return you make if instead of paying points you invest the money.