Current Mortgage Rates

Saturday, September 06, 2008



To decide whether or not to pay for discount points out of pocket, take a look at your cash reserves in your bank, your accepted mortgage term, the national interest rates, your credit history, and your anticipated income stream. All of these variables can come into play to help you determine whether or not to invest in discount points. If you can afford to pay the points, you'll need to figure out if it's worth it. Here's a general rule of thumb: the longer you'll keep the loan, the more attractive points become. You need to consider the overall economic value. If you're the type of person who likes spreadsheets, you can determine the optimal choice by looking at future values versus present values. However, most people start with the following route:

1. Figure out how many points you can pay

2. Find out how much any choice would reduce your monthly payment

3. Consider how many months of reduced payments you could enjoy

4. Decide whether it looks like it's worth it.

Sometimes you will have the option to lower your interest rate by paying discount points to the lender in addition to the standard costs of getting a loan. (Standard costs include appraisal, lender, closing and title fees.) The cost of each discount point is equal to one percent of the loan amount. So for a $200,000 loan, one discount point would cost you $2,000. The amount your interest rate decreases is determined by the current market conditions. If you know that you will only be in your home for a short period of time, paying discount points may not make sense. Be sure to talk over your options with your lender so that you fully understand if discount points can be beneficial to you in the long run.



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Current Mortgage Rates*

Loan Type
National Average
30-yr. fixed6.38%
30-yr. fixed jumbo7.00%
15-yr. fixed5.88%
15-yr. fixed jumbo6.50%
7/1 ARM6.25%
5/1 ARM6.00%
3/1 ARM5.88%
1-yr. ARM6.00%
1-yr. LIBOR ARM5.50%
10/1 ARM7.88%
*Mortgage Rates Updated: 09/04/2008