How to Use the Rate Buy-Down Calculator
Choosing the right interest rate is a balance between upfront cost and monthly savings. This calculator helps you determine exactly when your monthly savings will "pay back" the cost of buying a lower rate.
Buy-Down & 5-Year Savings Analysis
Flathead Valley Mortgage Custom Tools
Loan Details
1. Baseline (Current Quote)
2. Buy-Down Options
| New Rate (%) | New Points ($) | New Points (%) | New P+I ($) | Recoup | Net 5-Yr Savings |
|---|
Step 1: Establish Your Baseline
Start by entering the details of your standard mortgage quote in the Baseline section.
- Baseline Rate: The current interest rate offered without additional points.
- Baseline Points: Enter the cost of any points or the amount of any Lender Credit (use a negative number for credits, e.g., -1833).
- Baseline P+I: Your monthly Principal and Interest payment at this rate.
Step 2: Input Buy-Down Options
Enter the lower interest rate scenarios provided by your loan officer. You can add as many rows as you need to compare different options side-by-side.
- New Rate: The target lower interest rate.
- New Points: The cost associated with that specific lower rate.
- New P+I: The reduced monthly payment.
Step 3: Analyze the Results
The calculator will automatically generate two critical figures:
- Recoup (Months): This is your Break-Even Point. It shows exactly how many months you must stay in the loan before your monthly savings cover the upfront cost of the points.
- Net 5-Year Savings: This represents your total "profit" after 60 months. It calculates your total monthly savings over five years and subtracts the initial cost of the buy-down.
Pro Tip: If you plan on staying in your home longer than the Recoup Period, buying down the rate typically saves you money in the long run. If you plan to move or refinance sooner, the Baseline option may be your best financial move.