: If the break-even is long (e.g., 8+ years), you might see a better return by investing that cash in a high-yield savings account or a 401(k). Key Considerations for 2026
: If you think you'll refinance soon because market rates are falling, paying for a permanent buydown now is a wasted expense.
: You can generally only deduct interest (including points) on the first $750,000 of mortgage debt ($375,000 if married filing separately). buying points on mortgage
: If you plan to sell or move within 3–5 years, you likely won't recoup the upfront cost.
Buying mortgage points—also known as —is a strategy where you pay an upfront fee at closing to "buy down" your interest rate. This trade-off trades current cash for long-term savings, potentially reducing your monthly payments and total interest over the life of the loan. How Mortgage Points Work : If the break-even is long (e
: Each point usually reduces your interest rate by 0.25 percentage points (e.g., from 7.00% to 6.75%).
: You have enough cash for a 20% down payment (to avoid PMI ) plus the additional cost of points without draining your emergency fund. : If you plan to sell or move
: If buying points reduces your down payment to below 20%, the resulting cost of private mortgage insurance (PMI) may exceed your interest savings.