Why Some “Low Mortgage Rates” Aren’t What They Seem — And How Points Really Work

If you have been browsing mortgage rates online, you may have noticed some lenders advertising rates that look unusually low compared to everyone else. It looks like a great deal at first glance, but many of those rates only appear low because they are tied to discount points hidden in the fine print.

What Are Points

Points are simply upfront fees you pay at closing to lower your interest rate.

• One point typically costs 1 percent of your loan amount

• Paying points is like prepaying interest to secure a lower rate for the life of the loan.

There is nothing wrong with buying down your rate. It is a legitimate strategy that can work very well in the right situation. The issue is when lenders disguise the real cost by promoting a rate that you can only get by purchasing points without making those fees obvious.

When Does Paying Points Make Sense

Buying down your rate is smart when the financial benefit outweighs the cost. It tends to make sense if:

1. You plan to own the home long enough to reach your break even point

2. The monthly savings justify the upfront cost

3. You have enough cash reserves and are not stretching your budget

4. You plan to stay with the loan long term instead of refinancing soon

   
   

A well designed point strategy can save you thousands over time. But it should be a choice, not a surprise hidden in small text.

Why You Should Always Look Beyond the Advertised Rate

Two lenders may show rates that differ by a full percentage point, but once you look at the cost breakdown, they may be offering the same deal or the lower one may end up costing far more upfront. This is why comparing only the rate is never enough. You need to compare the true cost of that rate, including points and all lender fees.

How We Help You Evaluate Points the Right Way

When you work with us, we break everything down line by line so you can see:

• Whether that lower rate is tied to points

• How much those points actually cost

• Your exact break even timeline

• Whether paying points saves you money or drains cash you should keep on hand

You will know the full picture before you decide. No hidden fees, no confusing terms, no pressure.

Thinking About Buying Down Your Rate

If you want to see whether paying points makes sense for your situation, we will run the numbers and explain every option in plain language. The goal is simple. Help you choose the path that builds the strongest financial foundation for your next move.

Reach out to us today and we will walk you through it step by step.