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Here is a classic example of the media being behind the curve. Par rate today on a 30 year fixed rate mortgage is 5.875%. Rates on Wednesday dramatically improved and they are continuing to improve today.
Not sure what your question is "What do we do now?" If you are planning on buying, buy or if you are trying to refinance, refinance. Rates are good.
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Originally Posted by VictorBurek
Here is a classic example of the media being behind the curve. Par rate today on a 30 year fixed rate mortgage is 5.875%. Rates on Wednesday dramatically improved and they are continuing to improve today.
Not sure what your question is "What do we do now?" If you are planning on buying, buy or if you are trying to refinance, refinance. Rates are good.
Not only are they behind the curve on this, but they are sensationalizing the issue of volatility, which although is an issue is not the end of the world. Even at 6.5% rates are good. The unrealistic expectation of rates in the low 5% range and even the 4% range is keeping people from making rational financial decisions.
Keep in mind, to get the best rates you must have credit scores of 720. Also, to get the best rate you will be required to pay a point origination. Some homeowners choose to take a higher rate and not pay any origination which is a good option if you are not planning on keeping the house for a while. As a general rule, if you are keeping your home for at least 3 years, it will make sense to pay the closing costs and 1 point origination. Unfortunetly, a lot of home owners cant see the forest for the trees and all they focus on is the cost. I tell clients, getting an interest rate is like buying a car, you can spend more money and get a better car.
Hmm, my credit score is well above 720 and so is my wifes and we are looking at 6.5-6.625% range on an FHA. Even earlier in the month we never dropped below 6%.
I dont understand the point system. A rate should be the rate that is offered - not some arbitary amount that you pay more to reduce. The point system takes into account the amount the mortgage offeror is foregoing, right? But, over what period? My credit score is 643.
I dont understand the point system. A rate should be the rate that is offered - not some arbitary amount that you pay more to reduce. The point system takes into account the amount the mortgage offeror is foregoing, right? But, over what period? My credit score is 643.
Whoever you are working with to do your loan, has to make a profit and cover expenses. Even if you call a direct bank, the person you speak to must earn a living so there are 2 ways that we can be compensated. You, as a client can pay us or the lender your loan goes to can pay us.
A par rate is a rate that a lender does not pay any money to the loan originator. Today, par rate(with good credit, conventional) was 5.875%. If a client wants that rate, they must pay the closing costs and pay the loan officer.
Now, if a client doesnt want to pay the point to buy the best rate, then they could take a rate of 6.375%. At that rate, since it is above par, the lender will pay the loan officer about 1 point.
To get a better rate, you have to pay. That is the same for everything else in life. You want to go to a better collage, it costs more. If you want to stay in the finest hotel, it costs more. If you want the best rate, it costs more.
And a point is 1% of the loan, so $200,000 loan, the point would be $2000. From the above information, that $2000 cost will get you a rate that is .375% better saving the home owner $750 per year in interest. so in 3 years the point more then paid for itself. But, what if you keep the home for 12 years, look what it will save you.
In addition, points paid are tax deductible. So, if the point is $2000, and you are in a 25% tax bracket, it really only costs you about $1500.
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5.87?
