Are points a good buy on refinancings right now?

During the housing boom, my wife and I probably got at least a dozen solicitations a month from banks wanting us to refinance our mortgage or borrow against the equity in our house. Fees were being waved left and right as financial institutions looked to find ways to get borrowers deep in debt. But now that the real estate market is in the tank, banks are singing a different tune.

As the scads of people trying to refinance know, banks are not giving anything away any longer. Those mortgage interest rates of under 5% often come with a catch called points, which are pre-paid fees. In other words, whatever savings you get off your monthly payment will be negated. The fees are tax deductible and may be worth it if they can be paid off relatively quickly.

"So, if you're going to stay in your house for a long time and can afford to do so, paying more points in the beginning may get you a better interest rate and save you more money in the long run," according to the American Institute of Certified Public Accountants.

For us, the issue is not clear cut. Though we have no plans to move, we are not sure how long we will stay in our house. The interest rate we have on our existing mortgage also is pretty good, 5.625%. Several banks told us that their rates were not much better. That surprised me but I guess given the current economic climate, they are being cautious.

Best we can tell, refinancing could save us about $150-$200, depending on whether we take the points or not. I am not convinced it is worth the bother.