How to Calculate the Best Mortgage Deal

So what does that mean in terms of dollars and cents? For answers, start with online calculators like the one on BankingMyWay.com, which shows that an apparently small point purchase upfront can reap major savings over time. For example: A single point on a $500,000, 30-year fixed mortgage at 6% will save a total of $16,931 over 10 years, $27,500 dollars over 15 years, and $36,960 over 20 years.

"The most important thing is to sit down with a real estate professional who can counsel you on which loans best suit you based on income, tenure in house and future income expectations," says Walter Molony, Senior Public Affairs Associate with the National Association of Realtors.

Feel free to shop online for price comparisons. "But if you're doing it on your own, you need to check them out with the Better Business Bureau," Molony says. And if your real estate agent gets a referral fee for sending you to a lender, it must be disclosed by law. (Don't be afraid to ask your agent for multiple quotes, either!)

Of course there is another way to use points to save on your mortgage, and that is by making the right friends in high places, like Countrywide Financial (CFC Quote) CEO, Angelo Mozilo. That is because it was recently reported that Mozilo doled out hundreds of thousands of dollars in savings on closing costs, lender's fees and mortgage points to members of his inner circle.

That circle includes such notables as Democratic Senators Chris Dodd (Conn.) and Kent Conrad, (N.D.) and two former CEOs of Fannie Mae (FNM Quote) -- not exactly people who are likely to be struggling with their debt burdens. In one example, Sen. Conrad admitted he had a point knocked off a $1.2 million mortgage he received in 2002 for a Delaware vacation home. (Sen. Dodd recently announced the controversy will not impede his ability to lead Congress through the continued subprime mortgage mess.)