Two mortgage options, a $134 monthly difference, and a decision that changes depending on how long the buyer keeps the loan and how much cash they need after closing.

The buyer has found a home they want. The lender has offered a lower rate. The monthly payment looks better.

Then comes the price: another $8,000 at closing.

The buyer turns to you. “Should we do it? We’ll probably refinance when rates come down anyway.”

That sentence contains two decisions and a prediction. The buyer is choosing how much to spend today, how much to pay each month, and making an assumption about when this mortgage will be replaced.

For an agent, the useful contribution is helping separate those questions before the buyer gives up cash they may need, or rejects a lower rate that could serve them well for years.

Consider a hypothetical $500,000 purchase with 20% down and a $400,000 mortgage. The buyer is comparing two 30-year fixed-rate options from the same lender at the same time:

Option A: 7.25%, with no discount points. Monthly principal and interest: approximately $2,729.

Option B: 6.75%, with $8,000 in discount points paid in cash at closing. Monthly principal and interest: approximately $2,594.

The lower rate saves about $134 a month. Other loan costs are assumed identical.

These are illustrative terms, not available quotes or a claim that two points normally buy half a percentage point. One point equals 1% of the loan amount; the rate reduction it purchases depends on the lender and pricing.

The decision is timely. Freddie Mac’s October 15 survey put the average 30-year fixed mortgage at 7.40%. But the national average cannot tell this buyer which offer is better. Their actual pricing and circumstances determine that.

The first calculation seems straightforward: divide the extra $8,000 by the monthly savings. It takes roughly five years for the smaller payments to recover that upfront cash.

That is useful information. It is also an incomplete comparison.

Part of each mortgage payment reduces the debt. These two loans do not have identical balances after two, three, or five years. Looking only at the monthly savings misses that difference.

There is another distinction the buyer needs to make: how long they expect to own the house versus how long they expect to keep this particular loan. A buyer can live in a home for a decade and replace the mortgage much earlier.

Neither “take the lowest rate” nor “we’ll refinance anyway” answers the decision in front of them.

Below is the comparison at three holding periods, the cash question that can override the arithmetic, the questions to put to the lender, and a worksheet to use with actual offers.