8/10/23 – Should your client pay points?

Does a rate buydown make sense? So for about 18 months, I have been saying that rates would be lower in 12-18 months, and who the heck knows? So that is a decision our clients must make, but they usually ask for advice. I am a big 0-point guy in typical markets, and I still think the smart money is on paying no points at this time, as rates will be coming down in the next year or two, but here is how the numbers look. The rates below are not indicative of today’s rates as they vary based on credit score and down payment.

$700,000.00 loan Amount – 30-year Fixed rate – 0 Points – 6.750% – $4540.19

$700,000.00 loan Amount – 30-year Fixed rate – 1 Point – 6.375% – $4367.09 / $173.10 savings for $7000 = 40.44 months breakeven

$700,000.00 loan Amount – 30-year Fixed rate – 2 Points – 6.125% – $4253.27 / $286.92 savings for $14,000 = 48.79 months breakeven

There are exceptions when we can’t get a 0-point loan, or a client needs to have a lower payment to qualify or feel comfortable, then we go with the lower rate after a discussion.

I keep going back to rates that were in the 4’s and 3’s for the most part from 2010 until the Pandemic when rates dropped into the 2’s. On the other hand, rates were in the 5’s and 6’s from about 2001- 2010.

Interest rates have become worse today even though the core CPI number came out lower than expected.

• 12-day escrows if your buyer is pre-approved - Conventional / FHA / Jumbo / Bridge
• We do loans in all states, so call me with anything you need.  
• Government Loans (FHA / VA) are in the high 5’s and low 6’s.
• Conventional Loans up to $726,200.00 are in the low to mid 6’s and low 7’s.
• High Balance Loans $726,201.00-$ 1,089,300.00 are in the 6’s and 7’s
• Jumbo loans above $1,089,300 are in the 6’s and 7’s
• Bank statement loans - They are available with 10% down again! 7’s and 8’s + depending on down and credit score.
• No income qualifier – 20% down with reserves! In the 9’s!
• 0 down loans are in the mid to high 6’s – 660 credit score min right now, up to $740,000.00.
• Private Money lenders - hard Money Loans – 35% down!
• No Ratio Loans 30% down
• Debt Service Coverage loans with as little as 25% down
• Bridge Loans - are typically 7.99% with limited fees – But they get you where you need to go!
• 0 down California Dream for all Equity Share – Postponed until 2024!
• 3/2/1 Buydowns 2/1 Buydowns and 1/0 Buydowns are available at great start rates!

Interest rates are subject to change without notice! Above are LA County Loan Limits.

I am around all weekend if you have any questions or if someone is interested in buying a property! My cell is 661-714-6258, and my office line is 661-260-2970 ext. 2222. Please text me at 661-714-6258 or email me at Mike@AugustaFinancial.com. Have a great day and a better tomorrow! Please call me when you have a client that needs to borrow!