Choosing your rate

Which rate should I choose?

Every rate on our pricing is the same loan priced a different way. Some cost you money up front to lower the rate (a buy-down); others give you a lender credit toward your closing costs. Here is how we think about the trade-off.

Buy down, or take the credit?

Rates have bumped up a little from where they have been, so it is natural to think, “rates are high, I should buy mine down.” In a market like this we usually lean the other way. The expectation is that rates come down sometime in the near future, and paying a lot up front to shave your rate today can be money you never get back.

Here is the trade-off in real numbers. Say you pay $5,000 to buy your rate down a bit. If rates improve over the next six months, you might get that same lower rate, or better, at no cost. If instead you had paid very little at closing, it is easy to refinance when rates drop, and you did not throw that $5,000 away.

The catch: that only works out if rates actually come down, if you keep your credit in good shape, and if you are staying in the home long enough for a refinance to make sense. If you are moving soon, the math changes.

It is a bit like playing the odds

Think of it as playing the odds rather than trying to call the exact bottom. When rates are already historically low, buying down can make sense, because there is not much room left to improve. Back during COVID, rates were around 2.5%, already very low. Buying down to 2.25% did not leave much upside, because a no-cost 2.125% was never going to show up later. Today, with rates elevated and widely expected to ease, keeping your cash and staying flexible is usually the smarter play. Smart borrowers play the odds; they do not bet the house on perfect timing.

The bigger risk is the loan type, not the points

One thing matters more than points or credits: fixed versus adjustable. A 30-year fixed carries a lot less risk than an adjustable-rate mortgage (ARM). With a fixed, your rate never changes for the life of the loan. With an ARM, when it adjusts, a jump of a few points can change your payment drastically. ARMs are best saved for a known, temporary situation, like when you are confident you will sell or refinance before the fixed period ends. If you are counting on rates falling, a fixed lets you simply refinance when they do, without the downside if they do not.

Opinion only, not financial advice. Rates, pricing, and the outlook can change at any time and are not guaranteed. Whether a buy-down, a credit, a fixed, or an ARM is right for you depends on your full financial picture.