Real Estate Question of the day: Should I Pay Points to Buy Down Your Mortgage Rate in 2026?
A Real-World Comparison on a $600,000 Home in Portland, Oregon, 30 year fixed, NOT temporary buy downs.
One of the most common questions I get from buyers right now is:
“Is it worth paying discount points to lower my interest rate?”
With 30-year fixed rates still hovering in the mid-to-high 6% range, many lenders are offering the option to “buy down” the rate. But is it actually a smart move — or are you better off keeping that cash and investing it?
Let’s run the real numbers using a realistic Portland-metro scenario.
The Scenario
- Home purchase price: $600,000
- Down payment: 5% ($30,000)
- Loan amount: $570,000
- Loan term: 30 years
Option A – Buy 2 discount points
- Cost of points: $11,400 (2 points × 1% of loan amount)
- Interest rate: 6.00%
- Monthly principal & interest: $3,417
Option B – No points
- Cost of points: $0
- Interest rate: 6.50%
- Monthly principal & interest: $3,603
Monthly difference: Option A saves you $185 per month.
How the Savings Add Up Over Time
| Years Owned | Interest Saved (6.0% vs 6.5%) | Extra Equity Built | Total Mortgage Benefit |
|---|---|---|---|
| 10 years | $28,457 | $6,215 | $34,672 |
| 20 years | $53,956 | $9,472 | $63,428 |
| 30 years | $66,726 | $0 | $66,726 |
Just looking at the mortgage itself, buying the points already looks pretty good after 10 years.
But there’s another important factor most people forget: opportunity cost.
What If You Invested the $11,400 Instead?
If you skipped the points and put that $11,400 into the stock market earning an average 7% annual return, here’s what it would grow to:
| Years | Value of $11,400 at 7% |
|---|---|
| 10 | $22,426 |
| 20 | $44,114 |
| 30 | $86,780 |
At first glance, after 30 years the stock market looks better. However, this comparison is incomplete — because when you buy the points, you also free up $185 every single month.
The Full Picture: Investing Both the Points and the Monthly Savings
Here’s the more accurate comparison:
| Years Owned | Mortgage Benefit | + Growth of $185/mo at 7% | – Lost Growth on $11,400 | Net Advantage of Buying Points |
|---|---|---|---|---|
| 10 years | $34,672 | + $32,081 | – $22,426 | +$44,327 |
| 20 years | $63,428 | + $96,554 | – $44,114 | +$115,868 |
| 30 years | $66,726 | + $226,122 | – $86,780 | +$206,068 |
When you factor in investing the monthly payment savings, buying the two points comes out significantly ahead at every time horizon.
Key Takeaways for Portland Buyers in 2026
- Paying 2 points (about $11,400) for a 0.5% interest rate reduction is often a reasonable cost in the current market.
- If you plan to live there for 10 years or more and actually invest the monthly savings, buying points is financially more advantageous in most cases.
- Even if interest rates drop later and you refinance, you will already have enjoyed the benefit of the lower monthly payments until then.
- Be sure to compare multiple lenders. The cost of points and the size of the rate reduction can vary by lender.
- 30 year fixed mortgage rate buy down makes sense. Not so much on temporary buy downs, like 3-2-1, 2-1 types.
- Always shop multiple lenders. The exact cost of points and how much rate reduction you get can vary.
- No one knows how long they will live in the home they purchase. As life goes on, what you planned for 5 years can easily turn into over 10 years in the blink of an eye. Therefore, since almost no one stays for the full 30 years, even if the lender emphasizes short-term savings, protect the long-term benefits.
Bottom Line
Some say, “Paying points isn’t automatically “good” or “bad.” It depends on…,”
- How long you plan to keep the loan
- Whether you’ll actually invest the monthly savings
- Your overall cash reserves and risk tolerance
Answer: I personally recommend buying down the rate even if you’re planning to stay less than 10 years (as you save more money as shown above).
In the example above, the math currently favors buying the points — especially for buyers who intend to stay put for a while.
Thinking about buying in the Portland metro area?
I’d be happy to run personalized numbers for your specific purchase price, and timeline — and connect you with strong local mortgage brokers who can shop both bank and non-bank options.
*Mortgage benefit = interest saved + extra equity built from the lower-rate loan.
Shawn Yu | Shawn Realty | 한인 부동산 전문가
12829 NW Avignon Ln, Portland, OR 97229
(503) 515-4499, shawn-realty.com