Another week, another headline screams how mortgage rates have falled to an all-time low.
Freddie Mac published its weekly mortgage rate survey Thursday and found that the "average" mortgage rate is now 4.96 percent, the lowest since the survey started in 1971.
But, if we look beyond the headline, we find that there's another part of the story worth watching. Mortgage rates are falling but the number of points required to lock those rates is not - with most lenders.
Most lenders are now requiring an average payment of 0.7 points to get the 4.96 percent rate from the headlines. That's up from 0.6 percent last week and 0.4 percent a year ago.
A "point" is a fee equal to 1 percent of the loan size.
Therefore, to get access to a 4.96 percent interest rate on a $200,000 home loan, today's typical lender would require an extra $200 versus last week and $600 versus last year. Today's mortgage borrower would be subject to a $1,400 closing cost in addition to the "typical" closing costs accompanying a purchase or refinance.
This is a period of historically low rates -- there's no doubt about that. However, the cost of getting access to low rates is increasing, for most buyers. The press doesn't always tell that part of the story and it's one more reason to look deeper than the headlines.
The good news is this. The lender I choose to work with, and recommend to my clients, charges the lowest fees of any lender I know. Drop me a line or give me a call and I will put you in touch with him.
(Image courtesy: The Wall Street Journal)
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