Are mortgage rates really as low as they look?

BankRate.com reports that the average interest rate on a 30-year fixed rate mortgage is down to 5.25%, close to an all-time low.

But as Gilbert & Sullivan wrote, things are seldom what they seem, and this may be a case, at least to some extent, of skim milk masquerading as cream. New fees called Loan Level Price Adjustments require borrowers extra fees if their credit scores fall below 740 -- even though 740 is generally regarded as a very good credit score.

RISMedia reports that "According to Freddie Mac's weekly rate survey, the average rate on a 30-year fixed-rate conforming mortgage was 5.05% in January 2009, and a payment of an average 0.7 point was required to obtain the rate. A year ago, the average rate was 5.76%, but it took less to get that rate -- an average 0.4 point was required."

On a $250,000 home, that extra 0.3 points is equal to about $750 in added closing costs that don't show up when you look at a list of average interest rates on mortgages.

As lenders look to generate upfront cash, they're also offering bigger discounts to borrowers who pay points, meaning that it might make more sense to plunk down an extra 1% of the loan value than it ever has before.

To be sure, the ultra-low interest rate environment still makes it an attractive time to buy a home. But when you're using those online calculators to figure out how much house you can afford, know that the interest rate you'll end up getting could be a bit higher than the one you see in the newspaper.