Loan mechanics
Points and PMI, finally explained side by side
July 11, 2026 · 4 min read
Paying up front versus paying monthly. How to find the break-even and decide which one fits your actual timeline.
Two different costs that both feel like a fee
A discount point is money you pay at closing to buy a permanently better interest rate. One point equals 1 percent of the loan amount. Mortgage insurance, or PMI, is a monthly charge that protects the lender when your down payment is under 20 percent, and it usually comes off once you reach enough equity.
Points are optional and buy you something forever. PMI is required by the loan structure and is temporary. Confusing the two leads people to make the wrong call on both.
Finding your break even
For points, divide what you pay at closing by the monthly savings. Pay 5,700 dollars to save 95 dollars a month and you break even in 60 months. Stay past that and the point paid for itself. Sell or refinance before it and it did not.
For PMI, compare the monthly cost against putting more money down or using a different structure. Sometimes keeping cash in reserves and paying PMI for two years is the stronger financial move, even though it feels worse.
How we decide with you
We start with how long you realistically expect to keep this loan, then look at what else that cash could do for you. A buyer who plans to move in four years and a buyer settling in for fifteen should not get the same recommendation.
You will see both options priced out before you choose, in plain numbers, so the tradeoff is yours to make.
Have a question about your own numbers?
Call or text us at 720-386-4071, or start your pre-approval online. We will walk you through the math before you sign anything.