# Calculate a simple mortgage-points break-even

A simple points break-even compares extra upfront cost with an assumed monthly payment reduction. Divide the extra cost by the monthly reduction to find the number of months needed to recover that cost under those assumptions. It is a shortcut, not a complete loan recommendation.

## Use comparable written scenarios
Ask for scenarios with the same loan amount, term, and other relevant basis. Keep points, lender credits, and other fee differences separate. The CFPB explains how points and lender credits relate upfront costs to the interest rate; your actual offers need their own figures.

## A fictional calculation
| Input | Amount |
| --- | --- |
| Additional upfront cost in scenario B | $3,000 |
| Monthly payment reduction in B | $60 |
| Simple break-even | $3,000 ÷ $60 = 50 months |

At 36 months, the assumed payment reduction totals $2,160, less than the $3,000 extra cost. At 60 months, it totals $3,600, which is $600 more than that cost. These are arithmetic illustrations, not predictions of your actual outcome.

## Understand what the shortcut omits
The calculation does not model the time value of money, tax treatment, principal-balance differences, refinancing, sale, changing costs, or alternative uses of the upfront cash. If the monthly difference is zero or negative, this simple recovery calculation does not produce a useful positive break-even.

```text
Calculate a simple break-even from these comparable scenarios.
Show extra upfront cost divided by monthly payment reduction.
If the reduction is zero or negative, explain why the shortcut does not apply.
State the omitted factors and keep all assumptions visible.
Do not recommend paying points or predict how long I will keep the loan.
Scenario figures and sources: [paste]
```

## Turn the result into questions
Ask the lender which charges differ, how the payment reduction was calculated, and whether the scenarios use the same terms. Discuss your circumstances with an appropriate adviser before making a consequential choice.

A break-even table can help you understand a tradeoff, but it should not hide uncertainty about how long you will keep the loan or what other costs matter. Save the written scenarios with the calculation so the figures can be checked again.

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SkillStall · 2026-10-02
CFPB: Lender credits and points: https://www.consumerfinance.gov/ask-cfpb/how-should-i-use-lender-credits-and-points-also-called-discount-points-en-136/