Should You Pay Mortgage Points?

To pay or not to pay points.

Elizabeth Carlassare
4-minute read
Episode #18

Now this is just a “quick and dirty” way to get a rough idea of whether paying points is worth it.  It doesn’t factor in the tax deductibility of mortgage interest. In most cases, discount points, because they’re prepaid interest, are tax deductible. It also doesn’t factor in the missed opportunity of how you might have otherwise invested the $1000.

I’ve included a link to a “points versus no points” calculator at the end of the transcript. The calculator lets you see how investing the money instead of paying points affects the decision. 

And here’s one final pointer on points: When you’re shopping for a mortgage and different lenders quote you rates, ask them to quote you the rate at no points so you can make apples-to-apples comparisons. Beware! Sometimes a lender will quote you a rate that sounds too good to be true. Be sure to ask them if you have to pay points to get that rate and, if the answer is “yes,” ask them what the rate would be with no points.


Today, I’m giving away two copies of Think and Grow Rich by Napoleon Hill. If you’ve sent me an e-mail or posted to the blog, you’re automatically entered in the book giveaway. It’s a newer, fully annotated edition of the classic book first published in 1937 on the power of your mindset when it comes to creating wealth and success. The books were donated by Ross Cornwell, the book’s editor. And the winners are Patrick C. and Gen-Gen. Congratulations, Patrick and Gen-Gen! Please check your e-mail for instructions.

Cha-ching! That's all for now, courtesy of Money Girl, your guide to a richer life.

If you have a question or comment, email it to money@quickanddirtytips.com. Money Girl is part of the Quick and Dirty Tips network. Check out the other helpful Quick and Dirty Tips podcasts like Modern Manners Guy, Legal Lad, and The Mighty Mommy. Thanks for listening!

Should I pay points to my lower rate? Click here for a calculator.

Mortgage image courtesy of Shutterstock


About the Author

Elizabeth Carlassare