Discount points are essentially pre-paid mortgage interest. When you pay them up front, your total interest rate decreases, as do your monthly payments.

That may sound like a good deal, but it usually isn't.

Here's how discount points work: A point represents 1 percent of your total loan amount. On a house with a $400,000 mortgage, a point costs $4,000.

Each point you pay will decrease your interest rate by about one-fourth of 1 percent. On our example house, paying one point on a 30-year fixed-rate mortgage reduces your rate from 5.875 percent to 5.625 percent. That lowers your payments by $63 a month.

That means you spent $4,000 up front to get $22,680 in savings over the life of your loan.

The problem is, you may not keep your mortgage for that long. While points are tax-deductible, they aren't refundable, if you refinance early. They're not transferable if you sell your house.

It usually takes about four years before you've saved as much as you paid up front for the point. So if you expect to leave your home or even just refinance before then, points are a waste of money.

Bernie Kiely, a financial planner in Morristown, N.J., bought his home in 2001 with a 30-year, 7.625 percent mortgage. He has already refinanced twice: first to a 6 percent, 30-year mortgage and again to a 5.125 percent, 20-year mortgage. He didn't get points, he says, because, "We were happy just going from where we were to where we are." If he had, he says, "The money would be gone."

Victor Steiner, senior mortgage account executive at Penn Federal Savings Bank, says points are also a bad idea when cash is tight. "If you put money into points, and now you have to put furniture on a credit card with higher rates, you just screwed yourself," he says.

Discount points, when refinancing, are an even worse idea: your tax deduction is amortized over the life of your mortgage, changing a $4,000 deduction into 30 deductions of $133.

So should anyone get points? Steiner notes that many companies put two points down when relocating employees. And if you're the company's paying for it, why not?

Steiner also says that buying points is more attractive now when rates are low than when they're high and you might want to refinance. So if you're absolutely certain you won't sell or refinance in the next four years, you can consider buying them.

Although, if your life and income are that stable, you should also investigate other investment options.

Jeffrey Guarino, a loan officer at Long Island's Contour Mortgage, suggests a biweekly mortgage plan. You make half-monthly payments every two weeks.

It's a relatively painless way to speed up your payoff. Guarino notes it can cut a 30-year mortgage to 22.7 years (and can lower your total interest by a third). On a $400,000 mortgage it means you save $98,202 over the life of the loan.