I need advice.

[wmarat]

I have been offered 5.125% on my morgage or 4.75% but I need to pay 1 point. It will take 43.8 months to cover the cost of this point. Does it sound acceptable?

TIA.

[Anonymous]

If you plan on staying much longer than 5 years, and you have the extra cash to pay while still having decent reservs then yes.  If you plan on leaving in under say 6 years, and/or you do not have substantial reserves/savings in place I would say no. 

[wmarat]

Thanks.

You mean to stay in house (which I do) or stay with current lender (which I do not)?

And an additional question. Is this point tax deductable?

TIA.

[Anonymous]

Either case.

When you are figuring this take into account that you will get a slightly larger tax credit for the higher interest rate, and would be loosing interest if that money were put into a savings account.  So, if it takes 43 months to pay off the point, you are probably looking at closer to 60 months before it is a true break even deal.  If you are going to either refi or sell in under 60 months I would say keep the cash...Especially in this economy and with even the no point rate being very historicly low.