Premium Pricing allows you to conserve/invest cash while potentially having a slightly larger tax deduction. With a 3% market rate vs. 3.25% premium priced rate, the difference in your mortgage payment is about $55. If you evaluate what you could potentially invest in with the 2.75% Premium pricing credit ($11,000 based on a $400,000 sale price) you could potentially come out ahead maybe. However, be aware, using a $400k sales price scenario, overall you would pay $207,109.81 in interest at 3.00% and $226,697.10 @ 3.25% A DIFFERENCE OF $19,587.29. Of course making extra monthly/annual payments could offset the interest and pay your mortgage off early. Applying money to the principal takes payments off of the end of your mortgage. With the offset of the additional tax deduction you could get the best of both worlds by keeping the $11,000 and getting a better deduction! Consulting a financial planner and tax advisor for a quick scenario could be useful in helping you make an informed decision. Good luck!