Susan Deierling, Assoc. Broker
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Realty Executives Northern Arizona
Tag Archives: Discount Points
30-year fixed rate mortgage rates made new, all-time lows once again this week.
According to Freddie Mac’s weekly mortgage rate survey of more than 125 banks nationwide, the average 30-year fixed rate mortgage rate fell 4 basis point to 3.62% nationwide.
The rate is available to conforming, prime borrowers willing to pay an accompanying 0.8 discount points plus a full set of closing costs. A “prime” mortgage applicant typically has excellent credit, verifiable income, and at least 25% equity in their home.
And, it’s not just the 30-year fixed rate mortgage that made new lows in this holiday-shortened week, either. The 15-year fixed rate mortgage did, too, falling 5 basis points to 2.89%, on average.
The 15-year fixed rate mortgage requires 0.7 discount points plus closing costs.
Discount points are a one-time, up-front closing cost, based on loan size. If your loan requires 1 discount point, that means that your loan has a closing cost equal to 1 percent of your loan size. If your loan requires two discount points, the fee would be equal to two percent of your loan size; and so on.
So, based on this week’s Freddie Mac survey, a home buyer in Sedona opening a $200,000 mortgage and paying 0.8 discount points would face to a one-time $1,600 fee to be paid at closing.
The good news is that discount points are optional.
To avoid paying discount points, simply ask your lender for a “zero points” loan. You’ll get a higher mortgage rate than what Freddie Mac shows in its survey, but you’ll pay fewer closing costs.
Today’s low rates are terrific for both home buyers throughout AZ and existing homeowners looking to make a refinance. As compared last year at this time, mortgage rates are down by 98 basis points — nearly one full percentage point.
Mortgage payments are much lower today as compared to July 2011 :
- July 2011 : $512.64 principal + interest per $100,000 borrowed
- July 2012 : $455.77 principal + interest per $100,000 borrowed
Today’s rates yield an 11 percent payment discount as compared to last year.
Mortgage rates are unpredictable so there’s no guarantee that low rates will last forever, much less through the summer. If today’s rates meet your household budget, consider locking something in.
Mortgage rates have resumed their downward trend.
According to Freddie Mac’s weekly Primary Mortgage Market Survey, the national average 30-year fixed rate mortgage rate fell 5 basis points to 3.66% this week. The rate is available to “prime” borrowers who are willing to pay, on average, 0.7 discount points plus a full set of closing costs.
30-year fixed rate mortgage rates are down in seven of the last eight weeks but, depending where you live, the mortgage rates made available to you will vary. The Freddie Mac survey notes that mortgage rates vary by region.
For example, mortgage applicants in the West Region received the lowest rates from lenders, on average, but also paid the highest number of discount points. Discount points are a specific type of closing cost where 1 discount point is a fee equal to one percent of your loan size.
Average mortgage rates in the five U.S. regions, as tracked by Freddie Mac :
- Northeast Region : 3.70% with 0.7 discount points
- West Region : 3.62% with 0.8 discount points
- Southeast Region : 3.68% with 0.7 discount points
- North Central Region : 3.65% with 0.7 discount points
- Southwest Region : 3.68% with 0.7 discount points
Nationally, one year ago, the average 30-year fixed rate mortgage rate was 4.50%. Today, it’s 3.66%. This 84 basis points difference yields a monthly savings of $49 per $100,000 borrowed at today’s rates, or $588 per year.
A $400,000 mortgage would save $2,352 annually at today’s mortgage rates as compared to June 2011.
The 15-year fixed rate mortgage rate is also low, averaging 2.95% nationwide with 0.6 discount points. This is the second-lowest reading in recorded history. However, when the 15-year fixed averaged 2.94%, banks required an average of 0.7 discount points to get it. One could argue that this week’s average rate-and-points combination is actually a better “deal” because closing costs are lower.
Mortgage rates continue to break new lows so, if you’re eligible to refinance, the timing may be right to explore your mortgage options. Similarly, if you’re in the market to buy a home, today’s low rates will help to keep your home affordability high.
Talk to your loan officer about capitalizing on the lowest rates of all-time. Rates in Sedona may not rise starting next week, but when they do rise, they’ll expected to rise quickly.
Conforming mortgage rates continue to drop.
For the second straight week, the 30-year fixed rate mortgage fell to a new, all-time low nationwide. According to Freddie Mac’s weekly mortgage rate survey, the average 30-year fixed rate mortgage rate dropped 1 basis point to 3.83% this week for borrowers willing to pay 0.7 discount points plus a full set of closing costs.
The 15-year fixed rate mortgage also set a mortgage rate record, registering 3.05% with an accompanying 0.7 discount plus closing costs.
Discount points are a one-time, up-front closing cost, based on loan size. 0.7 discount points is equal to 0.7% of the borrowed amount. A home buyer in Cottonwood opening a $200,000 mortgage and paying 0.7 discount points, therefore, would be subject to a one-time $1,400 fee paid at closing.
Borrowers wanting to avoid paying discount points can expect higher mortgage rates than Freddie Mac’s reported national average.
Falling mortgage rates are nothing new throughout Arizona. Since peaking in February 2011, mortgage rates of all types have been in steady decline. The 30-year fixed rate mortgage has shed 122 basis points since that date, falling from 5.05%; the 15-year fixed rate mortgage has shed 124 basis points, falling from 4.29%.
Low mortgage rates give today’s home buyers additional purchasing power, stretching home affordability to new heights.
Low rates also help existing homeowners to lower monthly mortgage payments. For example, as compared to mortgage rates just 15 months ago, homeowners refinancing into today’s 30-year fixed rate mortgage stand to save 13.4 percent on their respective mortgage payments.
A comparison :
- February 2011 : $539.88 principal + interest per $100,000 borrowed
- May 2012 : $467.67 principal + interest per $100,000 borrowed
A homeowner with a $300,000 mortgage at February 2011 30-year fixed rate mortgage rates would save $2,600 annually with a refinance to this week’s low rates. Even accounting for discount points and closing costs, the “break-even point” on savings like that comes relatively quickly.
Mortgage rates can’t be predicted so there’s no guarantee of low rates forever. If today’s rates meet your budget, consider locking something in. Speak with your loan officer about your options.
After a brief surge north of 4 percent last month, mortgage rates have settled down, near their lowest levels of all-time.
According to Freddie Mac’s weekly Primary Mortgage Market Survey, for applicants willing to pay 0.7 discount points plus a complete set of closing costs, the average 30-year fixed rate mortgage rate fell to 3.88 percent this week.
0.7 discount points adds $700 to your mortgage closing costs for each $100,000 borrowed.
Mortgage rates are down this week on “safe haven” buying. The move is triggered by Wall Street’s concern that Spain and Italy will have trouble servicing their respective sovereign debt. In response, investors are selling risk-heavy assets and using the proceeds to purchase U.S. government-backed bonds.
This creates demand for mortgage bonds which, in turn, pressures mortgage rates lower.
The storyline is similar to what transpired in Greece last year, and, at least for now, it gives Sedona home buyers reason to cheer. So long as economic uncertainty remains, mortgage rates may stay low.
Of course, like all things in real estate, though, mortgage rates are local. Rates offered by banks varied by region.
Freddie Mac’s survey of 125 banks showed the following regional breakdown :
- Northeast Region : 3.88% with 0.8 discount points
- West Region : 3.85% with 0.8 discount points
- Southeast Region : 3.91% with 0.8 discount points
- North Central Region : 3.89% with 0.6 discount points
- Southwest Region : 3.90% with 0.8 discount points
The best mortgage “deals” are currently available to North Central Region residents. The most expensive loans are for those in the Southeast.
Relative to history, though, all mortgage rates look inexpensive. Conforming 30-year fixed rate mortgage rates have never been as low as they are today. It’s a bonus for home buyers because cheap mortgage rate yield cheap mortgage payments. Home affordability remains near all-time highs.
If you’re unsure of whether now is a good time to buy or refinance, the answer is yes. Talk to your loan officer to review your mortgage options.
After a brief run-up two weeks ago, mortgage rates are back below 4 percent. It’s good news for home buyers and mortgage rate shoppers of Cornville because with lower mortgage rates come lower mortgage payments.
According to Freddie Mac’s weekly Primary Mortgage Market Survey, the national, average 30-year fixed rate mortgage rate fell to 3.99 percent this week from last week’s 4.08 percent.
Last week had marked the first time since December 2011 that the benchmark rate crossed north of 4 percent — a span of 16 weeks.
And, it wasn’t just rates that got cheaper this week — closing costs dropped, too.
Freddie Mac’s survey showed that the average number of discount points to accompany a 30-year fixed rate mortgage fell one-tenth of a percent this week to 0.7, where one discount point is equal to one percent of your loan size.
As a real-life example, a $200,000 Village of Oak Creek mortgage with an accompanying 0.7 discount points would be subject to an additional $1,400 one-time closing cost. Last week, that cost was $1,600.
Note, though, that these are average mortgage rates for the nation. On a local level, rates may be higher or lower, and so may the accompanying number of discount points.
For example, in this week’s Freddie Mac survey, each U.S. region boasts its own “average rate” :
- Northeast Region : 4.00% with 0.7 discount points
- West Region : 3.94% with 0.9 discount points
- Southeast Region : 4.01% with 0.8 discount points
- North Central Region : 3.99% with 0.6 discount points
- Southwest Region : 4.02% with 0.8 discount points
These rates are each well below the average rates of a year ago when the average 30-year fixed rate mortgage was 4.86%.
Low mortgage rates can’t last forever so if you’ve been wondering whether now is a good time to buy a home or refinance one; or whether rising rates will harm your monthly budget, the answer may be yes. A weak economy held mortgage rates low last year. An improving economy should push rates higher this year.
Talk to your loan officer and review your home loan options. Looking ahead to spring and summer, mortgage rates appear poised to rise.