Current Mortgage Rates

Sunday, October 12, 2008



It is the difference between what the lenders offer brokers and what the brokers then offer the home buyers. This markup accounts for the broker's commission. For example, the posted price on a particular loan is 5% and zero points but the loan officer induces the borrower to pay 5% and one point. That point is the overage. It is worth $1,000 on a $100,000 loan, and typically the loan officer gets half. An overage can thus double the loan officer's commission. Overages are heavily concentrated on high-rate loans with negative points, or 'rebates'.

For example, the lender posting a price of 5% and zero points might also quote 5.25% and -2 points. Loan officers push higher-rate plus rebate combinations because they can collect an overage without taking any cash out of borrowers' pockets. If the loan officer in the example above quotes 5.25% and -1 point to the borrower, the other point of rebate becomes the overage. The borrower pays for the overage in the interest rate for the next five or 10 years, but that's down the road. Overages associated primarily with rebate loans are an equal opportunity abuse, practiced by lenders and mortgage brokers alike.

Whether quoted to you by a loan officer or a broker, the price of any loan may contain overages. Have the lender or broker write down all the costs associated with the loan. Then ask if the lender or broker will waive or reduce one or more of its fees or agree to a lower rate or fewer points.



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Current Mortgage Rates*

Loan Type
National Average
30-yr. fixed6.12%
30-yr. fixed jumbo7.62%
15-yr. fixed5.88%
15-yr. fixed jumbo7.12%
7/1 ARM6.25%
5/1 ARM6.00%
3/1 ARM5.88%
1-yr. ARM5.50%
1-yr. LIBOR ARM6.12%
10/1 ARM8.25%
40-yr. fixed7.12%
*Mortgage Rates Updated: 10/07/2008