Understanding Rates and Points – Frank Rexford Mortgage Team

Shown below are rate options for a 30 year fixed rate, 45 day lock, primary residence purchase with a 740 FICO. Our initial approach is to look for the lowest rate that doesn’t cost you any points – and you can see below that the “no points” rate, is 7.125% on this rate sheet. Sometimes we refer to this “no-points” rate as the “par” rate. For rates above 7.125% on this rate sheet, you receive a lender credit that reduces your closing costs.

We are generally not fans of paying much in the way of points. Today, October 10, 2020 – rates are at the highest they have been since 2001, but still below the historic average of 8%. Rates have increased for many reasons, including inflation, recession fears, the war in Ukraine, and more. The good news is that rates are cyclical, and we do think rates will come down – at some point in the future.

We will help you make a decision about whether you should pay points or not – the option is always yours to do as you prefer.

From the options below, you can see that you would pay .250 points for a rate of 6.875% – which is .250% below the no-points rate of 7.125%. And so it would take 1 year to recoup the points. You would pay 1 point, or $4400, for a rate of 6.625%, which is .500 points below the 7.125% no-points rate. And so it would take 2 years to recoup the points you paid. Once you have recouped the points, you are at the breakeven point, and begin at that point to benefit from the lower rate.

Rates 10/10/22	APR	Loan Amount	Principal & Interest Payment	Points You Pay For This Rate	Your Cost In Dollars For This Rate
6.000	6.337	$440,000	$2,878	3.125	$13,750
6.125	6.427	$440,000	$2,917	2.750	$12,100
6.250	6.505	$440,000	$2,955	2.250	$9,900
6.375	6.582	$440,000	$2,995	1.750	$7,700
6.500	6.672	$440,000	$3,034	1.375	$6,050
6.625	6.761	$440,000	$3,073	1.000	$4,400
6.750	6.862	$440,000	$3,113	0.750	$3,300
6.875	6.938	$440,000	$3,153	0.250	$1,100
7.000	7.063	$440,000	$3,193	0.250	$1,100
7.125	7.164	$440,000	$3,234	0.000	$0
7.500	7.54	$440,000	$3,356	-0.250	($1,100)
7.625	7.665	$440,000	$3,397	-0.625	($2,750)

Rate locks are available in lock periods of 7, 15, 30, 45, 60 and 75 days. You will pay more points for a longer rate lock, so when it is time to lock your rate, we will lock for a period of time that encompasses your closing date.

Frequently Asked Questions

When will rates go back down?

Don’t apply for any new credit until after we have closed your loan, and don’t make any unusual charges on your existing credit. Your loan is being underwritten per your current financial status.
Photographs of documents are NOT acceptable. Originals, scans and faxes are acceptable.
Bank statements must contain your name, your account number, and 30 days of complete activity. We need ALL NUMBERED PAGES of banks statements. Even if any numbered pages are blank.
Please provide your closing attorney information asap so that we can order your title work.
Please provide your homeowner’s insurance agent’s contact info asap so that we can request your insurance documentation and submit it for approval.
Once you have signed your loan application, we will send you a request to pay for your appraisal fee with a credit card.
Please directly contact your closing attorney to obtain wiring instructions for your closing funds – you MUST do this yourself for your own security. No one on my team and no one from Corporate Investors Mortgage Group, Inc. will ever send you wire instructions. If you receive an email from anyone at Corporate Investors Mortgage Group, Inc. providing you with wire instructions, do NOT wire your funds with those instructions and notify me immediately.