Last week, Freddie Mac reported that the 30-year fixed-rate mortgage rate was 5.38 percent, down from the prior week’s 5.59 percent tally. In June alone, the rates have fluctuated an average of one quarter of a percent each week. The news is grim for anyone trying their luck at purchasing when rates hit their absolute lowest. But, many buyers are bringing more money to the table in an effort to recapture the lower rates of weeks past. As the saying goes, money talks.

Buyers are now openly asking their loan representatives what they would have to pay to bring the rates back down to a level they were too slow to capture. While it may not be an option for every potential home buyer, those with upfront cash do have the opportunity to pay their way into a lower mortgage rate.

The process is not unique to this recession. Buyers, historically, have been interested in doing so when rates are already low. The reason for this is because the price for buying points to lower rates is based on the price of the mortgage, and the costs must be paid at closing. It typically takes about four years of payments for borrowers to make up the cost of one point. Therefore, when interest rates are higher, borrowers tend to avoid additional upfront costs and aim to take their chances of gaining a lower rate by refinancing years later.

Paying upfront requires a borrower to buy one point for the price of one percent of your mortgage. Generally, that one point can lower your rate by one quarter of a percent. It may not seem like a huge amount, but the change could save you hundreds of dollars a month. So, if you plan to live in your home and keep the loan longer than the four years it will take to make up the cost of one point, then it could be the right move.

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