ASK JEFF

Should I pay mortgage points?

A straight answer to a real question.

Mortgage points are an upfront cost paid for a lower interest rate. Divide the cost of the points by the estimated monthly savings to calculate a simple break-even period.

Then compare that period with how long you expect to keep the loan, your available cash, and alternative uses for the money. Points can help in the right situation, but a lower rate is not automatically the lowest-cost plan.