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What Are Mortgage Points?

If you have ever checked out the current status of mortgage interest rates, you may have seen the average points listed next to the rates. What are these points and how do they affect your interest rate? Points Defined Mortgage points, or discount points, are upfront fees paid to your lender that allow you to “buy down” your interest rate on your home loan. The idea is that you are prepaying some of the interest on the mortgage, which gives you a lower rate. The more points you pay, the lower your interest rate will be. One point is equal to 1% of the total mortgage loan amou...

February 6th, 2019 | Interest Rates, Conventional Loans, Fixed Rate Mortgages, What Are Mortgage Points?

Why Do Mortgage Rates Go Up and Down?

Mortgage interest rates fluctuate from week to week and they can make huge swings from decade to decade. In the early 1980s, for example, mortgage rates were as high as 18% while roughly 30 years later they are less than a third of that rate. What causes they changes in mortgage rates? What factors affect the direction of rates? The Fed The Federal Reserve is tasked with keeping balance between inflation and the national unemployment rate. One of the ways it influences this balance is with it federal funds rate – the interest rate that banks charge each other for overnight loans. T...

January 30th, 2019 | Interest Rates, Why Do Mortgage Rates Go Up and Down?

3 Things You Need to Know About ARM Loans

Adjustable rate mortgage (ARM) loans always grow in popularity when interest rates are on the rise. Some borrowers think ARMs are the best way to save money on their mortgage in a higher rate climate. ARM loans can also be helpful for those who do not plan to stay in their home more than a few years. Whatever the reason, if you are considering an adjustable rate mortgage here are three things you need to know before signing. 1. What type of ARM are you getting? Of course, you already know that an adjustable rate mortgage means that eventually your loan interest rate can adjust higher or ...

January 23rd, 2019 | Adjustable Rate Mortgages, Interest Rates, 3 Things You Need to Know About ARM Loans

Interest Rate vs. APR

Interest rate and annual percentage rate (APR)-those are the same thing, right? Unfortunately, too many mortgage buyers don’t realize the answer is no. The interest rate on your mortgage loan is different from the APR and understanding both is important to getting the best deal on your mortgage. Interest Rate The interest rate on a loan is the cost for borrowing the mortgage principal. It is a percentage of the amount and can be either fixed or variable. The interest rate is amortized over the life of the loan and the interest payment is rolled into the monthly mortgage payment. ...

January 9th, 2019 | Interest Rates, Interest Rate vs. APR

Should I Pay Mortgage Points?

If you are buying a home or refinancing, you have probably heard about “mortgage points.” This form of pre-paid interest can save you thousands of dollars over the course of your loan but in many circumstances is not worth the upfront cost. How do you know whether to pay points or not? Here’s a quick guide to help you figure it out. What are Mortgage Points? Mortgage points – also known as discount points - are essentially a way to pay some of the interest upfront on your home loan. One point is equal to 1% of your mortgage amount. For example, one point on a $100...

July 18th, 2018 | Purchasing a Home, Interest Rates, Should I Pay Mortgage Points?