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Mortgage Points Calculator (11c)

Rate of Return on Fixed-Rate Mortgages

Who This Calculator is For: Borrowers who want to know whether paying
higher points to get a lower interest rate on an FRM is a good investment.

What This Calculator Does: This calculator allows you to determine the rate
of return on an investment in higher points that reduces the interest rate.

 

Enter the Following Information:
  Loan Term, in Years
  Income Tax Bracket ( e.g. 27 )
   Is This Loan for the Purchase of a Property or a Refinance?
  Expected Years in House, Cannot Exceed Term
  Low-Rate
High Points		 High-Rate
Low Points
  Interest Rate Per Year (e.g, 7.50%)
  Points  (e.g. 1.5)

DO NOT USE DOLLAR SIGNS ($), COMMAS (,) PLUS SIGNS ( + )
OR PERCENTAGE SIGNS (%) IN ANY INPUT BOXES

This is your marginal tax rate, the rate at which each additional dollar of income will be taxed. If you pay only Federal income taxes, it is the highest tax bracket you used when you calculated your taxes. Federal tax brackets currently are: 10%, 15%, 25%, 28%, 33%, and 35%. If you also pay state and/or local income taxes, these marginal rates can be added to the Federal rate. For example, if you had to pay 25% to the IRS and 5% to the state of Pennsylvania, your tax bracket is 30%. To perform a "pre-tax" analysis enter zero (0) as the tax rate. The period cannot exceed the shortest mortgage term. The period may be stated in fractions. For example, 25 years and 1 month would be entered as 25.083, 25 years and two months would be 25.167, and 25 years and 3 months would be 25.25, etc. This affects the after-tax analysis because on a purchase transaction points are fully deductible in the first year whereas on a refinance the deduction must be spread over the life of the loan. The rate of return changes with the length of time you stay with the mortgage.