Quote:
Originally Posted by Alfisti
What does no points mean? And how long is the interest rate locked for?
I locked in ours (usually go variable) for 3 years at 2.65 last yr.
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You can pay points up front to reduce the rate. For example, you might get a loan for 3% but if you pay 1 point (1% of the loan amount), you could buy that rate down to 2.75%. Paying points is rarely a good idea.
For your second question, I am going to answer 2 ways. First, the rate of 2.75% (sorry for the 2.74% in the title) is "locked" or guaranteed until I close. That means that if rates rise to say, 3% between now and when I close on the loan on 29 Jun, my rate still stays at 2.75%. If it goes down, I could lock in the lower rate. Once I close on the home on 29 Jun, the rate will be locked at 2.75% (that's what fixed means) and can never go up. I think things work a bit differently up North.
2.75% is remarkable for 30 year money. If inflation stays at 2%, then my real interest rate is just 0.75%. If I can make more than 0.75% real on my money over the next 30 years, I come out ahead. I am looking to retire next year and really didn't want to carry a mortgage into retirement, but when I run the numbers, I come out way ahead with a 2.75% mortgage.