Mortgage discount points are upfront fees you pay to your lender to reduce your interest rate. One point equals 1% of your loan amount and typically lowers your rate by about 0.25%.
Permanently lower your interest rate. These are the points discussed above - you pay upfront to reduce your rate for the entire loan term.
Lender fees for processing your loan. These don't reduce your rate - they're simply part of closing costs charged by the lender.
If buying points doesn't make sense for your situation, consider these other ways to secure a lower mortgage rate in Nevada
Even a small credit score increase can lower your rate significantly without paying points upfront.
A larger down payment reduces lender risk and often qualifies you for better rates without buying points.
Rates vary significantly between lenders. Shopping around can save you more than buying points with one lender.
15-year mortgages typically have rates 0.5%-0.75% lower than 30-year loans, saving you massive interest.
Timing your rate lock strategically can save you without any upfront cost. Monitor market trends.
Government loans (FHA, VA) or special programs may offer better rates than conventional with points.
Our Nevada mortgage experts will analyze your situation and recommend the best strategy – whether that's buying points or using alternative methods to lower your rate
Buying points makes financial sense in specific scenarios. Calculate your break-even point and consider these factors before deciding
You plan to stay in the Nevada home for 5+ years. The longer you keep the loan, the more you benefit from the lower rate. If you're putting down roots in Las Vegas or Reno, points can save tens of thousands over time.
You have surplus cash for closing costs and can afford to pay points without depleting emergency savings or down payment funds. Points are an investment that pays off monthly.
Current interest rates are elevated. Buying down your rate becomes more valuable when base rates are high (e.g., 6-7%). Locking in a lower rate protects you from high monthly payments.
For primary residence purchases, discount points are typically tax-deductible in the year paid. If you itemize deductions, this reduces the effective cost of points (consult your tax advisor).
Lower monthly payment helps you qualify for a larger loan. If you're stretching your budget to buy in Nevada's competitive market, buying points can reduce DTI and improve approval odds.
You plan to sell or refinance within 3-5 years. If you move or refi before breaking even, you lose money. For short-term stays (military relocation, job change, etc.), skip the points.
You're scraping together down payment and closing costs. Preserve cash for emergencies, moving expenses, and home improvements. Don't deplete savings to buy points – that's financially risky.
If you anticipate refinancing to a lower rate soon (within 1-2 years), buying points now is wasteful. Better to keep cash and refi later when rates improve without paying points twice.
If you're getting a rate in the low 5% range or below, the marginal benefit of buying it down further is small. Your money might earn better returns invested elsewhere.
If you can invest the cash elsewhere for higher returns (e.g., stock market historically ~7-10% annually), you might come out ahead keeping the slightly higher mortgage rate and investing the difference.
The break-even point is when your monthly savings equal the upfront cost of points. After this point, you're profiting from the lower rate.
Mortgage discount points (or "buying down the rate") are upfront fees paid at closing to reduce your interest rate. Each point typically costs 1% of your loan amount and reduces your rate by about 0.25%.
Complete guide to mortgage discount points in Nevada. Learn when buying points makes financial sense, calculate break-even timelines, understand cost vs savings, and determine if paying points upfront is worth it for Las Vegas, Reno, and Henderson homebuyers.
Complete guide to buying mortgage discount points in Nevada. Learn when paying points upfront makes sense, break-even analysis, cost vs savings, and whether buying down your rate is worth it for Las Vegas, Reno, Henderson homebuyers.