Current Mortgage Rates
Saturday, November 21, 2009
When determining whether you want pay for points, think about how long you expect to live in the house. Over a short time frame - less than five years or so - paying points usually doesn't makes sense, as you will pay more in points than you will save in interest. However, if you plan to stay in the house for 10 or 20 years or longer, points will pay off over time.
Although the prospect of paying a few thousand dollars more initially isn't very attractive, you may be able to save money over the duration of the mortgage. Generally speaking, it takes about five to seven years to recoup the cost of paying a point upfront. Here's the math. Let's say you take out a $100,000 30-year fixed mortgage, and you have the option of either paying 6% with no points or 5 3/4% with one point. With the 6% mortgage, your monthly payment will be $600. And with the 5 3/4% loan, it would be $584, a savings of $16 per month. After about 62 months, or a little over five years, you would have recouped the $1,000 point you paid upfront. And then you would start to benefit from the lower monthly payments. But you must also consider how you might otherwise invest that $1,000. If you can beat the taxable equivalent of your mortgage rate (about 8% in the example above for those in the 25% tax bracket) then don't bother paying points. Invest the money instead. We believe 6% is a prudent estimate for long-term returns. You can finance points, which allows you to pay them off as part of the loan. But this increases the cost of your points, and it will take longer to break even. If you can, pay for the points in full at closing.
Although the prospect of paying a few thousand dollars more initially isn't very attractive, you may be able to save money over the duration of the mortgage. Generally speaking, it takes about five to seven years to recoup the cost of paying a point upfront. Here's the math. Let's say you take out a $100,000 30-year fixed mortgage, and you have the option of either paying 6% with no points or 5 3/4% with one point. With the 6% mortgage, your monthly payment will be $600. And with the 5 3/4% loan, it would be $584, a savings of $16 per month. After about 62 months, or a little over five years, you would have recouped the $1,000 point you paid upfront. And then you would start to benefit from the lower monthly payments. But you must also consider how you might otherwise invest that $1,000. If you can beat the taxable equivalent of your mortgage rate (about 8% in the example above for those in the 25% tax bracket) then don't bother paying points. Invest the money instead. We believe 6% is a prudent estimate for long-term returns. You can finance points, which allows you to pay them off as part of the loan. But this increases the cost of your points, and it will take longer to break even. If you can, pay for the points in full at closing.
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30 Years or 15?
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Can Points Be Financed?
What is the Real Cost of Mortgage Insurance?
What is Title Insurance?
How Can I Avoid Escrows?
No-Cost Mortgages
Do I Really Need All These Title Policies?
Finding the Current Mortgage Rates?
Best way to lower your Mortgage Rates?
What all to consider while selecting a Good Mortgage Rate?
How to get updated Mortgage Rates on a daily basis?
30 Years or 15?
Why Pay Points?
Best way to lower your Mortgage Rates?
What all to consider while selecting a Good Mortgage Rate?
How to get updated Mortgage Rates on a daily basis?
30 Years or 15?
Why Pay Points?
Can Points Be Financed?
What is the Real Cost of Mortgage Insurance?
What is Title Insurance?
How Can I Avoid Escrows?
No-Cost Mortgages
Do I Really Need All These Title Policies?
Finding the Current Mortgage Rates?
Best way to lower your Mortgage Rates?
What all to consider while selecting a Good Mortgage Rate?
How to get updated Mortgage Rates on a daily basis?
30 Years or 15?
Why Pay Points?
Get Current Mortgage Rates
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Current Mortgage Rates*
Loan Type National Average |
|
| 30-yr. fixed | 4.75% |
| 30-yr. fixed jumbo | 5.25% |
| 15-yr. fixed | 4.25% |
| 15-yr. fixed jumbo | 4.75% |
| 7/1 ARM | 4.38% |
| 5/1 ARM | 4.00% |
| 3/1 ARM | 4.00% |
| 1-yr. ARM | 3.75% |
| 1-yr. LIBOR ARM | 4.38% |
| 10/1 ARM | 4.62% |
*Mortgage Rates Updated: 11/21/2009