Are points worth it?

[Michael Osborne]

I am trying to determine if it is worth paying points down on my mortgage refinance. Basically the break even point is 37-38 months and it's a property I plan to keep long term as a rental. So I see not real reason not to pay the points.

Any reasons I maybe overlooking?

[Kevin Romines]

The answer is......it depends? LOL If you know that your going to hold the mortgage at least to the point of the pay back or break even, then yes, points are worth while. Why do I say that? Because they help give you a lower payment and anything after the break even point is where your saving money per month by however much your saving over a loan with no points?

The average payback time should be 3-7 years. Anything longer than that doesn't make good financial sense?

Don't forget that points are tax deductible. So figure out your tax bracket and realize that you get to not pay taxes in the amount equal to the deduction. If you factored in your deduction, your payback time is actually less months? Most of my buyers and refinances have discount points, its never an issue when I show them the payback time and the tax deductibility. 

I hope this helps.