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There isn’t a fixed percentage that mortgage broker Kelly Sansom says borrowers should never accept. His warning is about the cost of buying a rate down: even the lowest offer may be a poor choice if the upfront fees take longer to recover than you expect to keep the mortgage.
Sansom’s six-year guideline is his own rule of thumb, not a universal cutoff. To decide whether points make sense for you, compare equivalent Loan Estimates and weigh their full costs against your likely time in the loan.
Why the lowest mortgage rate may be the wrong choice
Discount points are upfront fees paid to a lender in exchange for a lower interest rate. A lower rate can reduce monthly payments, but the borrower first has to pay for that reduction. If you sell or refinance before the savings make up the cost, the lower rate may leave you worse off.
As MoneyLion reports it, Sansom, a mortgage broker with ClearPath Utah, put it this way: “The rate I’d reject could be the lowest one offered. If buying it down takes more than six years to recover the upfront cost, counting payment savings and additional principal paid down, I recommend against it.” Treat six years as Sansom’s personal recommendation, not a rule that applies to every borrower.
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“A low rate can make buyers feel like they won. But I want them to understand what they paid for that win,” he said, according to MoneyLion. Gregg Harris, founder and CEO of LenderCity, offered a different framing in the same report: “The high rate would be a rate higher than the next best competitor,” adding that “shopping rates and fees is paramount to getting a better rate.” Together, those comments point to a practical comparison: evaluate the competing offers and the cost of each, rather than judging a loan by its rate alone.
How to compare mortgage offers fairly
Ask lenders for Loan Estimates based on the same loan amount, loan type, term, and number of points. A comparison between different loan structures can make one offer look better without showing which is actually less costly for your needs.
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The Consumer Financial Protection Bureau (CFPB) recommends comparing Loan Estimates from different lenders for the same kind of loan. Review these items:
- Interest rate and APR: The rate affects the interest charged; APR provides a broader cost measure. Compare both.
- Points and lender charges: Check discount points, origination charges, and any lender credits. Ask how the rate changes if you choose a loan with no points.
- Payment and mortgage insurance: Compare the monthly payment, including mortgage insurance where applicable.
- Closing costs and cash to close: A lower payment can come with more money due upfront.
- Loan features: Check whether the rate is locked and whether the loan is fixed-rate or adjustable-rate. Ask questions about prepayment penalties or balloon payments, which the CFPB flags as risky features.
The CFPB also advises borrowers to check whether points were expected and ask what comparable options without points would cost. Its Loan Estimate guidance explains how to review the form.
Estimate the break-even time for points
For a rough first pass, divide the upfront cost of points by the monthly payment savings. If points cost $4,000 and save $100 per month, the simple calculation is $4,000 ÷ $100 = 40 months to recover the cost through payment savings.
That is a cash-flow estimate, not a complete measure of a loan’s economics. It does not capture additional principal paid down, and your actual outcome depends on how long you keep the mortgage and on the terms of the offers. Moving or refinancing before break-even can leave too little time to recover the upfront cost. Compare the estimated break-even period with your likely time in the loan.
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What Sansom’s client example shows—and what it doesn’t
MoneyLion reports that Sansom recalled a couple who expected to move within four to five years. In his example, reducing the rate from 6.75% to 6.25% would cost $20,800 upfront and lower their payment by about $342 per month. Over four years, he estimated $16,416 in payment savings, leaving $4,384 unrecovered before accounting for principal paydown. After estimating the added equity from that paydown, he said the couple would be ahead by about $85.
Those figures are Sansom’s estimates for a broker-reported client example, not a typical result or an independent calculation. The costs, savings, and break-even point for another borrower could differ.
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How Freddie Mac’s average rate fits into your decision
Freddie Mac’s Primary Mortgage Market Survey (PMMS) reported national averages of 7.28% for 30-year fixed-rate mortgages and 6.60% for 15-year fixed-rate mortgages on October 1, 2026. Its reported 30-year average was 7.03% the week before and 6.34% a year earlier. These figures offer market context, not a personalized quote or a threshold for rejecting an offer.
Freddie Mac says its weekly averages are derived from mortgage applications submitted through Loan Product Advisor. Its current PMMS page also says fees and points are no longer published because lenders do not always provide them under current data requirements. Your own offer depends on its specific terms and your circumstances; a national average does not tell you whether buying down your rate is worthwhile.
See Freddie Mac’s PMMS page for its published averages and survey information, and the MoneyLion article for its report of Sansom’s comments and example.
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