Paying for Points vs. higher Interest rate

[Roberta Marcos Marcos]

HI all,

Anyone out there have a strategy they use to determine whether you should pay points to get lower interest rate but pay more up front in closing costs.

The rationale i have been using is this:

*if my payment for points, let's call it $1k, is equal to our monthly payment savings at 14 months

*then if we assume we will keep the mortgage without refinancing for longer than 14 months. paying the points is worth it

*if we assume rates will go down and we can refinance and get cash out in 14 months or less, it is not worth it to pay for points

Would love to hear other people's thoughts?

Thank you!