X

Wondering what income you'll need to buy a median-priced home? See our latest metropolitan area home affordability analysis

Wondering what income you'll need to buy a median-priced home? See our latest metropolitan area home affordability analysis

How much do points affect the interest rate?

When I consider paying points to get a mortgage, how can I determine what the effect of paying discount points will be on my loan's interest rate?

There is no single answer to that, because it's not a linear relationship. In general, each point will lower your interest rate by between 0.125% and 0.25%, but the exact trade-off depends on the mortgage lender. It can also depend upon the type of mortgage you selected (fixed or ARM) and the term of the loan. Even the lockin you select can affect it.

For the most part, lenders have a range of pricing options which range from "rebate pricing" (where you get a higher-than-market interest rate but cash back at closing), up to about four points you can pay out-of-pocket. The maximum interest rate change from "par" -- that is, a zero point interest rate -- is probably no more than about 1% or thereabouts.

Ask the expert
Keith Gumbinger
Keith Gumbinger
Mortgage Expert
Vice President, HSH.com
About Keith: Mortgage market observer and analyst with 35 years experience... (more)
Submitting your question...

Question received! Check back later to see if your
question gets published.

Q: What is the difference between "rate" and "APR"?
APR 26, 2021
A:

APR is perhaps the most misunderstood part of mortgage finance. "Rate", or more properly "contract interest rate" is the actual rate of interest you are being charged...

Read More
Q: How do I find out who owns my mortgage?
MAR 15, 2021
A:

The owner of the loan is most often the "investor" -- the entity who put up the actual funds to make your mortgage happen.

Read More
Q: When will I begin paying more principal than interest?
MAR 04, 2021
A:

A 4 percent 30-year fixed-rate mortgage will see equal parts principal and interest at about payment number 154.

Read More
Add to Homescreen?
X
X
Install this web app on your phone :tap and then Add to homescreen