Is a Mortgage Rate Buydown Worth It to Refi?

If you are refinancing and wondering, "Is a mortgage rate buydown worth it?", you are asking the right question.

A buydown can lower your rate, but it also raises your upfront cost. The decision usually comes down to one thing, how long you plan to keep the loan after refinancing.

This guide walks through the math, compares options, and helps you avoid expensive mistakes.

What is a rate buydown in a refinance?

A rate buydown means paying discount points at closing to get a lower interest rate on your new mortgage.

• 1 point typically costs 1% of the loan amount

• More points usually mean a lower rate

• The exact pricing varies by lender, market conditions, and loan type

When people search mortgage rate buydown points, they are usually trying to answer two practical questions:

1. How much will points cost me now?

2. How much will I save each month?

If monthly savings recover the upfront cost before you sell, move, or refinance again, the buydown may be worth it.

The break-even math, simple example

To estimate if a mortgage rate buydown worth it decision makes sense, use this formula:

Break-even months = Total buydown cost / Monthly payment savings

Example:

• Loan amount: $350,000

• Buydown cost: $5,250

• Monthly principal and interest savings: $120

Break-even = $5,250 / $120 = about 44 months (3.7 years)

If you expect to keep this refinance longer than 44 months, the buydown often has a better chance of paying off. If you expect to move or refinance sooner, paying points may not pencil out.

You can also pressure-test your assumptions with our refinance calculator.

Permanent buydown vs temporary buydown

Permanent buydown

A permanent buydown lowers your note rate for the full life of the loan. This is the most common refi scenario when paying points.

Best fit when:

• You plan to stay in the home for years

• You want predictable long-term savings

• You have enough cash after closing to keep healthy reserves

Temporary buydown

A temporary buydown lowers payments for a limited period (such as year 1 or years 1 and 2), then the payment steps up. It is more common in home purchases, but some refinance structures can include temporary payment relief depending on lender and program.

Best fit when:

• You need near-term payment flexibility

• You expect income growth soon

• You understand exactly when and how the payment resets

If you are mainly trying to maximize long-term interest savings, a permanent buydown is often the cleaner comparison.

Who benefits most from paying points?

A mortgage rate buydown calculator can help, but these borrower traits usually matter most.

1) Longer time horizon in the home

The longer you keep the new mortgage after refinancing, the more likely points pay off.

2) Enough cash on hand

Even if the math works on paper, draining reserves for points can be risky. Emergency savings still matter after closing.

3) Tax situation that supports the strategy

Points may have tax implications, but treatment often depends on whether the loan is for purchase or refinance and on your itemization profile. Check with a qualified tax professional before assuming a deduction.

Red flags that often make a buydown a bad idea

Watch for these before paying for a lower rate:

• High mortgage rate buydown cost with a very long break-even period

• Uncertain plans to stay in the home

• Expectation that you will refinance again soon

• Thin post-closing cash reserves

• Large points payment that could be better used to pay down higher-interest debt

If one or more of these apply, a no-points or low-points option may be safer.

Questions and documents checklist before you choose

Use this with your lender to compare offers apples to apples.

Ask your lender:

1. What is the exact rate and monthly payment at 0, 1, and 2 points?

2. What is the break-even month for each option?

3. Is this a permanent or temporary buydown?

4. What is the APR difference after all lender fees?

5. Could lender credits reduce my upfront cash instead?

6. What happens if I sell or refinance before break-even?

Gather these documents early (requirements vary by lender and program):

• Recent pay stubs or income documentation

• W-2s or tax returns, if requested

• Current mortgage statement

• Homeowners insurance information

• Bank statements for assets and reserves

• Government-issued ID and property details

Bottom line

The best answer to mortgage rate buydown worth it is usually not about getting the lowest headline rate. It is about matching upfront cost to your real timeline in the home.

If your break-even is comfortably shorter than your expected stay, and your cash reserves remain strong, paying points can be a practical move. If your timeline is short or uncertain, keeping closing costs lower is often the better refinance decision.

For deeper comparisons, you may also like:

• The Costs of Refinancing a Mortgage: What Homeowners Need to Know

• How to Use a Refinance Break-Even Calculator

• Unlocking Savings: Understanding Mortgage Refinance Quotes