W. Joey Styron, Peter Basciano & James M. Grayson (all of Augusta State University, College of Business Administration) have published Mortgage Interest Rates and Points:  Practical Advice for Your Clients, 109 Tax Notes 1431 (2005), also available on the Tax Analysts web site as Doc 2005-24073, 2005 TNT 239-46.  Here is the Introduction:

In the process of arranging for mortgages to purchase or refinance property, clients often seek the advice of a tax professional. One of the issues is the payment of points. All tax professionals who work with individual taxpayers know the basic rules for deducting points. Points paid to acquire the taxpayer’s principal residence are immediately deductible. Points paid for refinancing or for purchases of property other than a principal residence must be deducted ratably over the life of the mortgage.

The taxpayer often has the choice of paying points to obtain a lower annual interest rate on the mortgage. Under what conditions would it be advisable to pay points to obtain a lower interest rate? We have developed a model that helps the tax adviser determine if the payment of points is advisable.