Paying mortgage points seldom pays off for borrowers, according to a study co-authored by Abdullah Yavas, Elliott Professor of Business Administration at Penn State's Smeal College of Business, and Yan Chang of Freddie Mac.

On average, borrowers who buy points paid off their mortgages about 37.5 months too early for the purchase to pay off. Borrowers pay points to lenders to receive lower mortgage rates. In the study, just 1.4% of borrowers who purchased points held their mortgage loans long enough to make the purchase of points pay off. It also found that just 1.5% of borrowers who didn't purchase points would have been better off buying them. And it found that borrowers who bought points often don't think of them as costs they can never recover and thus are less likely to refinance. When they do refinance, they often do it later, possibly because they hope to compensate for the points.

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