It depends on your particular situation. Three major factors should be considered when deciding whether to pay points:

  • How much you can afford to pay up front?
  • How long do you expect to make payments on your mortgage?
  • What is the length of your loan and how long do you plan to live in the home?

Many people looking for a long-term mortgage opt to pay points to ease the monthly payments over the long term of the loan. People looking at a mortgage with a shorter term or looking to stay in the home for a shorter period of time often opt to make a larger down payment instead of paying points.

You can refinance your home for a number of reasons, most of which typically result in a more favorable financial situation. Some of the benefits of refinancing include:

  • Lower your monthly payments: By obtaining a lower interest rate, you may lower your monthly payment – keeping more money in your pocket.
  • Shorten your loan term: Maybe you’re making more money now than you were when you first got your mortgage and can afford to put more money toward it. By shortening your loan term, you’ll pay off your mortgage sooner. Short term means you’ll pay less interest over the life of your loan. An example would be refinancing a 30-year mortgage into a 20-year or 15-year mortgage.


% Down 20% 20%
Sample Closing Costs $4,800.00 $4,800.00
Loan Amount $200,000.00 $200,000.00
Sample Rate 4.25% 4.25%
Sample Loan APR 4.450% 4.604%
Est. Monthly Payment $983.88 $1,504.56
Total Payments $354,197.00 $270,820.00
Total Interest $154,197.00 $70,820.00
  • The calculation above assumes annual amortization. This calculation is provided as an illustration to demonstrate potential savings. It is not intended to provide investment advice, nor is it a guarantee of applicability or accuracy in regard to your personalized circumstances. Not all borrowers will qualify for the rates listed above. This is not a loan approval. Estimated monthly payment does not include homeowners insurance or taxes. Actual payment will be higher. Annual Percentage Rate (APR) incorporates fees into a single rate so that it is possible to compare loans with different rates, fees or terms. Please seek advice from a licensed loan officer to see if refinancing may be right for you.
  • Extend your loan term: Maybe you want a lower monthly payment and are willing to extend your mortgage out several years to get it. It’s important to understand that you’ll pay more over the long term in interest, but you’ll have a lower payment each month.
  • Get cash out: As you pay on your mortgage, you build equity. Eventually, you can refinance through certain programs to get access to funds from that equity. These funds can be used in a variety of ways, such as paying bills, making a special purchase, improving or repairing your home or paying for college tuition.
  • Stabilize an underwater mortgage: As a result of the 2008 financial crisis, many homeowners watched their home values plummet below the outstanding balance on their mortgages. With a HARP refinance, you can refinance an underwater mortgage and regain control.