In The News
Historically Low Mortgage Rates Go Even Lower With Points
February 14, 2009 by Mortgage Align · Leave a Comment
Welcome to the latest in a new series of audio news stories from Quicken Loans Relationship Marketing Manager Mark Smith. Below, you can listen to the audio file (mp3) or if you prefer, you can read the text.
Intro: You’re listening to the Your Mortgage and Money Podcast, brought to you by Quicken Loans, the nation’s largest online lender and one of the leading direct FHA lenders. Here’s your host, Mark Smith.
Anchor: Anyone who’s been paying attention to the mortgage market has surely noticed how far rates have dropped! Right now, you can find 30 year fixed-rate loans in the mid five percent range. These are historic lows for mortgage rates!
This is great news for a lot of people, especially those in adjustable rate loans who have seen their rates continue to climb. But, right now there is an opportunity to cut today’s interest rates even lower.
Paying points is a popular way to lower the standard mortgage rate being offered. A single point represents one percent of the loan amount. They are a great way for people to save some cash if they are looking to stay in their home for a while and are really popular when rates are high. But, the same advantages applies when rates are low.
Imagine this case: a homeowner wants to refinance their $200,000 loan. Without paying the points, the rate is 5 3/8 percent. But by paying one point – or $2000, they can lower the rate to 5 percent. That translates into a savings of $50 a month. The homeowner will recoup their $2,000 they paid in points in just 3 years, and then continue to pocket that extra $50 each month for the next 27 years/
Now, I know, $50 doesn’t seem like a lot, but over the full life of the loan, the homeowner will have saved $16,000. Now folks, that is some serious cash.
Paying points don’t make sense for everyone. For example, if you are planning to move soon, they might not make sense for you. The same goes if you do not have a decent amount of cash in the bank
The real story here is this: If you are looking to refinance, be sure you are working with a reputable lender who will ask you the right questions to understand your unique situation. They can help you explore the options that make the most sense for your individual situation.
Points or no points, right now is likely the best time to refinance in the last few decades. Start 2009 out right. Dust off your mortgage documents and see if you can benefit from today’s historic mortgage rates.
For Quicken Loans, I’m Mark Smith.
Wrap: For more information on how to build and maintain good credit, visit QuickenLoans.com. You’ll find hundreds of useful tips and articles about home buying, selling, refinancing, and personal financial planning. You can chat live with a mortgage expert, or use the free financial calculators to determine how much equity you have in your home, or how much home you can afford. You can also subscribe to the Quicken Loans mortgage news RSS service to receive free news articles and Podcasts to help you better understand what’s happening in the financial markets and how they may affect you.
