Should I listen to this builder's recommendation?

It is always just very simple math to determine if you should pay 'discount points' up-front to lower the interest rate. How much do the points cost up-front, and do you even have the extra cash. Assuming you do, how much lower is the payment? Now simply divide the cost by the payment savings to get your breakeven period. If you anticipate being in the home less than, or around just the breakeven period, it probably doesn't make any sense to pay points. On the other hand, if you are going to be there well past the breakeven period (and you are willing to spend the up-front money today), then paying points may make sense for you. I lend in MN WI IA ND SD, find me at JoeMetzler.com - Cambria Mortgage, NMLS 274132