I have the option of either a $1500 closing credit or knocking down my rate .25 for only 3/8 of a point (my understanding is that .25 usually costs a full point).  It is a 523k loan so the points will cost me about 2k.  Based on my rough math factoring in tax deductibility, I'll break even with the points compared to the credit in about 3 years.  I think we'll be in this place at least 5 years so am leaning towards the points, and of course the longer we stay the better the points option becomes.  Any thoughts are much appreciated.  Thanks in advance.

Sounds like the best option if it is a fixed rate loan.

I will have to agree with Karl on this one.  I would play it safe and take the lower rate.  Plans change and you could find yourself living in the home longer than 5 years.