Time Frame

• Points generally make sense to purchase when you plan to stay in your home for a decade or longer. If you only plan to remain without refinancing for three or four years, the points will usually not even pay for themselves.
  
  

Break Even Calculation

• You can calculate how long it will take for the points to pay for themselves by dividing the cost of the points by the savings per month, which your lender can tell you. For example, if your points cost $4,000 and will save you $60 per month, you would divide $4,000 by $60 to find that it would take more than 66 months to recoup the costs of the points.
  
  

Warning

• Even if paying points makes sense numerically, remember that the points must be paid at closing. Bankrate.com warns that if you cannot afford at least a 20 percent down payment, you probably should not purchase points because you will have to pay for private mortgage insurance for a longer period of time. Private mortgage insurance protects the lender against losses it may incur if you default, but offers no protection for you even though you have to pay for it.