Overview
When a client asks about paying points to lower their interest rate, you need to determine if it's financially worthwhile before building out complete loan scenarios. Points Analysis calculates the true monthly benefit (including amortization gain), the break-even period, and generates a client-ready PDF comparison—all from a single screen.
Before You Start
Requirement | Details |
Active loan scenario | You need a base scenario with rate and loan amount already entered |
Rate sheet access | Know the point costs for each rate tier you want to compare |
Up to 2 alternatives | You can compare the base rate against two buydown options |
Step-by-Step: Running a Points Analysis
1. Access the Points Analysis Tool
Navigate to the Control Center
Click the Analysis button
Select Points Analysis
2. Enter Your First Comparison Rate
Field | What to Enter |
Rate reduction | The lower interest rate (e.g., 6.125% if base is 6.625%) |
Points cost | The discount points required from your rate sheet (e.g., 1.5 points) |
3. Add a Second Comparison (Optional)
Enter an additional rate tier for comparison
Include the corresponding points cost
⚠️ Important: Always pull point costs from today's rate sheet—yesterday's pricing won't give your client accurate break-even calculations.
4. Click Analyze
The system calculates all comparison metrics automatically
Understanding the Results
Key Metrics Explained
Metric | What It Means |
Payment Difference | The simple P&I savings per month at the lower rate |
First Payment Principal | Amount applied to principal in month one at each rate |
Amortization Gain | Extra principal paid monthly because less goes to interest |
Total Monthly Benefit | Payment savings + amortization gain combined |
Break-Even Period | Months until point cost is recovered through total benefit |
Why Amortization Gain Matters
Standard mortgage calculators only show payment differences. Points Analysis reveals the hidden benefit: at a lower rate with the same loan amount, more of each payment goes toward principal. This "amortization gain" increases your client's total monthly benefit beyond just the payment reduction.
Example from a real scenario:
Base rate 6.625%: First payment principal = $576
Buydown to 6.125%: First payment principal = $634
Amortization gain = $58/month additional equity building
Finishing Up / Next Steps
1. Generate the Client PDF
Click the Generate PDF button directly from the results screen
Send the comparison document to your client for review
2. Guide the Client Decision
If they plan to stay in the home longer than the break-even period, buying points likely makes sense
Position this as reducing dependence on future refinancing, especially in uncertain rate environments
Quick Reference
Control Center → Analysis → Points Analysis → Enter rates & points → Analyze → Generate PDF → Send to client
Tips for Success
Show the "five handle"—clients respond positively to rates starting with 5.x% vs 6.x%, so include a sub-6% option when possible
Lead with break-even—frame the conversation around how long they plan to stay in the home
Use amortization gain as a differentiator—most competitors only discuss payment savings, not equity building
Run analysis before full scenarios—save time by validating the value proposition before creating detailed comparisons
Address the refi uncertainty—buying points now provides guaranteed savings vs. hoping rates drop for a future refinance
Related Topics
Creating Multiple Loan Scenarios
Understanding Rate Sheets and Pricing
Generating Client-Facing Documents
Break-Even Analysis Best Practices