Most people do not know that mortgage rates on average 3 times a day.  Slight changes in the rates can make a huge difference on your loan over the life of the mortgage.  There are many experts who claim to know where rates are headed, but just like a stock market analyst, these are only educated guesses.  Are you looking to refinance and curious what current rates are?  A good indicator of rates comes from Countrywide mortgage.  Note, in most cases this rate includes 2 points.

What are points? Very simply, you pay a fee to reduce your interest rate.  The fee is a percentage of your mortgage:  One point equals 1 percent.  As an example, if you take out a 100,000 mortgage, you may be offered rates as follows: 5 3/8 with 0 points, 5 1/8 with 1 point, 4 7/8 with 2 points.  If you took the lowest rate of 4 7/8, you would need to pay 2% or $2,000 upfront to get this rate.

Should I pay points? The payback period for points is generally 3 years.  If you are going to stay in your mortgage for more then three years, it makes sense to pay points.  This includes the possibility of refinancing in the future.  If you believe that rates will go down in the near-term which would cause you to refinance, then you may not want to pay points.  However if you plan to stay in the mortgage for the long term, pick the highest amounts of points offered.  You can roll these costs into your mortgage so that you have no cash to pay up front.

Are rates going up or down?  Nobody knows this for sure.  Anyone who says the do know are merely speculating, just as people speculate on the stock market.  Since rates change so frequently, the best way to get an idea of where they are going is to watch the 10-year bond rate.  The 10 year bond trades all day long when the market is open.  To get a real time quote for the 10 year, click below.

10-year Treasury note quote

Below you will see a 1 year history for the 10 year note followed by a 1 year history for 30 year mortgage rates.  If you look at the swings in both graphs, you can see a clear pattern.