[sweeps]

Yes, paying points effectively reduces your interest rate, but does not reduce your principal. Any points you pay are tax-deductible in the year you paid them. However, points only make sense if you plan on living in the house for a long time. Perhaps more important than the points is what the company is charging you in fees. Sometimes fees can run up to $10,000.

The location of the bank really doesn't make any difference, unless they limit the area in which they work. In that case, it would be where you're moving to, not where you're coming from.