I’m going to paraphrase the explanation of mortgage points. There are plenty of resources online to find a more thorough description. This one on Bankrate is great. Any buyer interested in points should have a discussion with their lender to get the specifics.

Paying points on a mortgage lower’s your monthly payment and the interest you pay on the life of the loan. You eliminate any benefit to paying for points if you refinance or sell the home before the breakeven point.

The cost of points are linked to the value of the mortgage. If you are buying a $800k house and putting 20% down and have a mortgage of $640k. One point would be $6,400 upfront. Typically 1 point reduces the interest rate by .25%, check with your lender. Let’s look at the numbers…

$640k mortgage at 2.85% has a payment (principle and interest) of $2,647. Total interest of $312,836.
$640k mortgage at 2.6% (2.85% - .25%) has a payment of $2,562. Total interest of $282,384

$6,400 cost of 1 point.
$85 reduction in monthly payment.
$30,452 reduction in total interest paid over the life of the loan.
The breakeven time for points is $6,400/$85= 75 months.

So… If you have $6,400 laying around and you don’t plan to refinance or sell the home in the next 6-7 years you could benefit from paying for points. For most people that bought in the last 10 years they have refinanced as the rates continued to drop. Rates are not likely to go much lower, and very likely to rise over the next 5 years.