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Is it better to buy discount points or make a larger down payment?

Both use cash to lower costs, but they do different things. Discount points buy down your interest rate, cutting your monthly payment and lifetime interest, with a break-even that pays off only if you keep the loan long enough. A larger down payment reduces the amount you borrow, lowers the payment, builds instant equity, and – once you cross 20% down – eliminates private mortgage insurance (PMI). If you're near the 20% line, putting cash toward the down payment to drop PMI often beats points, since PMI gives you nothing in return. If you're already past 20% and plan to stay put for years, points can edge ahead. Run both scenarios with your real numbers and time horizon at wealthserene.com/tools/home-affordability.

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Educational disclaimer. Everything on WealthSerene.com is educational and is not investment advice. Projections and calculations are illustrative; actual results depend on market conditions, your situation and factors outside this tool’s scope. For a decision specific to your situation, consult a qualified financial professional. View full disclosures