Mortgage Professor Website

What is the general strategy in paying more points to get a lower rate?

I am reading a lot on the mortgage professor website and he mentions paying more on points to get a lower interest rate. So I was wondering if generally there is a guide as to how much a point should be worth.

A little hard for me to explain but if the mortgage company offers me to pay 1 point, how much of a reduction in the mortgage should I expect?
Hmm. Conflicting answers here. Does 1 point equal 1/4 of a percent or 1/8?

Efflandt and Real Estate Guy made every smart observations. I dont see why paying 1 point to lower the interest rate 1/8% makes sense. People say its worth it when you stay long enough to meet the break even point; where the amount of interest saved equals the amount in points you spent. Sure its logical to spend as many points as you can if you plan to stay there for a long time. But, there’s a reason why you shouldn’t pay any points at all; inflation. With a fixed mortgage rate, you will be paying less and less interest each month. And since your payment stays the same, inflation will actually take more of the value of your payments away. So essentially as the interest due is lowering, the value of the interest is also decreasing. Now, if you pay 2 points upfront, you will be foregoing a lot of its present value. Due to inflation that 2 points will be worth less in the future. The money you have in hand today is worth a lot more than it will be in any future period. That’s why banks offer you that option, cause they could have more valuable money to invest with. You would make more money if you let it sit in your savings account. It’s funny that some so called brokers here didnt mention that to you.

13. The Mortgage Meltdown in Cleveland