Buying points at the time you apply for a mortgage  can potentially  be a  strategic investment. Particularly, now that interest rates have risen to their current levels.  Points , also known as, discount points are prepaid interest. You buy discount points to reduce  the  interest rate on your mortgage note.  Here is a simplistic way to help determine whether it makes sense to invest in points for your particular case. First, consideration is to determine how long you plan to hold the real estate property your buying. Next, have your Mortgage Specialist calculate the monthly  payments  (Principle & Interest) with points  and without points.  Then subtract the payment amount that had points included from the payment amount  that had zero points. This will give you the amount you save on a monthly basis  for  paying points (note: taxes and Insurance are not being taken into account in this calculation). Next, take this amount and multiply it by the number of months you plan to hold on to the property. This will give you an  estimated  "total savings" over that period of time. Finally, subtract the dollar amount of pre-paid interest (points)  that you invested upfront when you original took out the mortgage, from your total savings over the period of time you plan to hold the property. This will give you your return on investment.   If the number comes back positive, its worth considering paying points. If  it comes back negative, stay with the higher rate since  your timeline for owning the property     does not justify investing in discount points. You may also want to determine when your breakeven point is, too.    In some cases, since the interest paid may be tax deductible, it may still make sense to pay prepaid interest (points). This is a simplistic approach. So you want to talk to your tax adviser for your particular circumstances. There are other considerations you will want  to take into account.  Also, it is important to  note that "discount points" and "origination points" are not the same thing. See your Mortgage Specialist for more information and options...