What points and break-even mean
Why one point is not a fixed dollar amount
The CFPB defines one point as 1% of the loan amount. One point costs $3,000 on a $300,000 loan and $8,000 on an $800,000 loan.
Points generally buy a lower rate, but the rate reduction per point depends on the lender, loan type, and market. The calculator never assumes a standard reduction.
How the simple break-even month is calculated
The calculator divides the points and other upfront cost difference by the monthly principal-and-interest difference. It excludes time value, tax treatment, prepayment, and future refinancing.
If the point-paid quote does not reduce the payment, it usually cannot break even through monthly savings. When its other upfront fees are lower, the calculator instead shows how long that upfront advantage lasts.
Why the quotes should be comparable
Different lenders can change rates, points, fees, and other terms at the same time. Use written Loan Estimates and compare the same loan type when reading the result.