Inquiry: Mortgage Interest Rate with Point Buy Down

[Adonis Williams]

Hey all - 

I am looking to purchase at my 4th property  here in Maryland and I  want to ask lenders what are the lowest interest rates they are seeing for clients who are buying down their rates by 3 points? I see the base interest rate for federal lending is 4.25%–4.50%. Technically, you can't buy a (mortgage) loan interest rate below the federal funds rate right ?  I am curious to know what is the lowest I can expect interest rate to be + buy down with an excellent credit score. Thank you everyone. 

[Bill B.]

There’s almost always a rate at which it just doesn’t make sense. You’re paying too much for each 1/4 point discount. Plus. Imagine interest rates drop 2% or more in 2 years. Pretty much all the points you paid were wasted. 

Find the rate the lenders want to lend. It will be the “best deal”. Consider a 15 year loan. You might save a full percent just doing that and you have tons of money you didn’t pay in points. Or sometimes a bigger downpayment gives you a better rate. Rather than just spending the money on a rate buy down. 

Reach out to a loan broker with your exact info and the exact or at least type of property you want to buy and they should have options and opinions.