A recent report shows that borrowers tend to purchase too many points when selecting a mortgage. The study by Freddie Mac looked at points paid, interest rates and loan length. The results showed that those who paid points were drastically underestimating the amount of time they would hold their mortgage loans. In fact, the borrowers tended to pay off their mortgages over 3 years too soon for the benefit of the points to kick in. Unfortunately, many borrowers mistakenly focus on how long they plan on being in the home, rather than the loan, when calculating the break even point (the break even point is the amount of time it takes for the monthly savings of the lower interest rate to make up the up front cost of the points). The correct calculation should reflect how long they may be in the loan (not the home). Currently, according to Freddie Mac, mortgage loans are only in place, on average, four years (due to refinancing, relocation, home improvement etc.). The study showed that only 1.4 percent of borrowers who purchased points were in their loans long enough to make it pay off!