Rule of thumb for buying down a loan

[James Blalock]

Does anyone know of a rule of thumb about when to spend money up front to "buy down a loan"? My loan officer contacted me yesterday and asked me if I would be willing to pay a quarter of a point to move my interest rate from 4.625 to 4.5. For my loan, the quarter of a point is only $250. Seemed okay to me. I was told I could pay more points to bring the rate down further but it looked like it would take a while to recoup the up front costs. As far as REI is concerned, when is buying down a loan a smart move?