Without buying points, a monthly mortgage payment will be $958. Buying 1 point at closing would reduce the payment to $948.75. If each point costs $1000.00, rounded to the nearest year, how long would it take to break even by buying 1 point?
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Monthly mortgage payment without buying points : $958.
Monthly mortgage payment buying 1 point: $948.75
$958 - $948.75 = $9.25 ( reduces payment in 1 month )
In a year it reduces: $9.25 x 12 = $111
Each point costs $1,000 ( rounded to the nearest year )
$1,000 : $111 = 9.009 ≈ 9 years
Answer: It would take 9 years to brake even by buying 1 point.
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