Job openings unexpectedly increased in August after 2 straight monthly declines, but hiring was soft and consistent with a slowing labor market.

In September, however, private sector hiring picked up, according to ADP. The labor market is holding its ground despite some signs of weakness.

Fed Chair Powell said the recent half-point policy rate cut shouldn’t be interpreted as a sign that future moves will be as aggressive.

August’s pending home sales edged up 0.6% from July's record low but were down 3% year over year as affordability remains a concern.

Construction spending fell in August as companies scaled back projects while awaiting confirmation of Fed rate cuts.

A fall 2024 Investor Sentiment Index showed that 68% of investors view the current housing market as “better” or “much better” than a year ago.

 

What are points, and how much do they cost?

"Points" or "Discount Points" are a type of prepaid interest you can pay upfront to lower the interest rate on your mortgage. One point equals 1% of the loan amount.

Example:

• 1 point on a $100,000 loan = $1,000.

Should You Pay Discount Points?

To decide if paying points is a good idea, calculate your break-even point. This is when the money you save from a lower interest rate equals the upfront cost of the points.

Example:

• On a $100,000 loan, paying 1 point reduces your interest rate by 0.25%, saving you $15.17 per month.
• Break-even calculation: $1,000 (cost of points) ÷ $15.17 (monthly savings) = 65.9 months.

If you plan to own the property beyond this break-even period, it may make sense to pay the points.

The Rest of the Equation

Points can be tax deductible in the year paid on purchase loans and over the life of the loan on refinances (always consult with your tax professional for advice). A lower real cost could shorten the break-even period.

Example:

• If you’re in the 28% tax bracket, a $1,000 point payment could have a real cost of $720.
• Break-even period: $720 ÷ $15.17 = 47.5 months.

The Risks of Paying Points

Once you've paid points, that money is spent. If you sell or refinance before reaching the break-even point, you could lose the value of those points.

Alternatives To Paying Points 

Increase Your Down Payment

• Adding more to your down payment will lower your loan balance and your monthly payment—without needing to reach a break-even point.
• Example: Borrowing $1,000 less on a 30-year loan at 5% saves you $5.37 per month.

Save The Money

Cash reserves sometimes prove more valuable than a slightly lower payment.

Bottom Line: Weighing Your Options 

When deciding whether to pay mortgage points, ask yourself:

• Are you a short-term or long-term homeowner?
• Do you prefer a lower monthly payment, more cash reserves, or more home equity?
• Will you likely refinance before reaching the break-even point?

Each option has its pros and cons, and the best choice depends on your personal situation. We’re here to help you evaluate your options and run the numbers.

Contact us today at 888-616-9885 or click here. 

The economy grew at a 3% annualized pace in the second quarter, a faster pace than Wall Street had expected and a sign of economic resilience.

Orders for durable goods were flat in August, much better than economists’ expectation of a 3% drop.

Contrary to other reports showing labor market weakness, last week's jobless claims fell to 218K, hitting a 4-month low despite slower hiring.

New home sales fell less than expected in August. More homebuilders are optimistic for the near-term outlook thanks to downward rate trends.

Existing home sales were sluggish in August, falling 2.5% for the month. Still, home prices reached the highest August median on record.

Applications to refinance surged 20% last week and were 175% higher than a year ago. Purchase apps rose 1% for the week.

The Fed cut its policy rate by 0.50% this week. Mortgage rates had already fallen. Guidance suggests further improvement as the data warrants.

Retail sales showed a surprise gain in August, a sign of ongoing consumer resilience that suggests the economy remains on solid footing.

Jobless claims fell last week to the lowest level since May, indicating a healthy job market despite a slowdown in hiring.

Homebuilder confidence edged up in September as mortgage rates fell, breaking 4 months of consecutive declines.

Housing starts bounced back in August after tumbling a month earlier, reaching the fastest pace since April. New permits also climbed.

Existing home sales fell more than expected in August. House prices remained elevated despite a continued improvement in supply.

 

Inflation declined in August, reaching its lowest level since February 2021 and setting the stage for an expected policy rate cut from the Fed.

Jobless claims rose marginally last week to 230K. The pace of layoffs remains low even as the labor market shows signs of cooling.

Wholesale prices showed a mild increase of 0.2% in August, reinforcing indications the inflation rate is returning to low pre-pandemic levels.

August’s shelter inflation rate was down from its 8.2% peak in March 2023, but the 0.5% monthly gain was the highest since early 2024.

As rates moved lower last week, total mortgage demand grew 1.4%. Purchase apps rose 2%, and refinances were up 1% for the week.

Homeowners are sitting on more than $32 trillion in home equity, an all-time high. The average owner has $214K in equity.