Make sure that you ask whether there are any points which will have to be paid at settlement. And the payment is usually up-front, in cash, at settlement. Each point that you pay is equal to one percent of the mortgage loan amount.
Lenders have to take risks.
They are loaning money to a stranger, who may or may not be able to pay the loan in full. If you pay points to obtain a refinance loan, generally they are not deductible in full for the year they are paid. Rather, the IRS requires that you allocate the points by the number of years of your mortgage loan. Lenders are often willing to trade off points for interest rates. To do this, compare the monthly payment for both interest rates.