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Posted: 6/22/2003 10:54:12 PM EDT
I was looking into doing a refinance and getting some equity out of my house and got a real good deal but it is an adjustable that is fixed for two years. What are your opinions on going for it and refinancing a fixed in two years? What do you think the possiblilities are that rates will rise in those two years? My main worry is that California is teetering financially and that if they file a BK the waves would surely cause a dramatic effect in the market similar to what happened when NYC claimed BK.
Link Posted: 6/22/2003 10:58:00 PM EDT
If it was me, I would go fixed rate. I know that a lot of people who buy a house and only plan on staying in it for 5 years, go variable rate. When rates are hovering near [size=6]45[/size=6] year lows, id lock her down.
Link Posted: 6/22/2003 11:15:21 PM EDT
Fixed rate is the way to go right now...
Link Posted: 6/22/2003 11:51:35 PM EDT
[Last Edit: 6/22/2003 11:55:50 PM EDT by ProfessorEvil]
What are you plans with the house? That should help you decide. Staying in it long term and or wanting to have a fixed payment are considerations for fixed rates. Short term stays (<5 years) and low payments are reasons for adjustables. My parents, for example, knew they would be moving in a couple of years and chose an ARM when they bought their place. Saved them a fair amount of money. They aren't for everyone, but don't automatically discount an ARM.
Link Posted: 6/23/2003 7:26:40 AM EDT
[Last Edit: 6/23/2003 7:28:53 AM EDT by IYAOYAS467]
I'm a Mortgage Broker, so maybe I can shed some light on this. As has been stated, the type of loan you choose should be decided by what you intend to do with your home. An ARM (Ajustable Rate Mortgage) can come in various flavors (2/28,3/1,5/1 and so forth) but it is a fairly specific type of loan program. It is usually best reserved for people who are either in extreme debt and need the smallest monthly payment possible or are people who intend to move within a fairly short time period. ARM loan adjust after their fixed term expires, by utilizing LIBOR (London Inter-Banking Overnight Rate). If your simply looking for a low rate, then I would suggest either a 10,15, or 20 year fixed rate. I mean par right now on a 15 year fixed is about 4.45, and a 30 year is about 4.9. Whether or not you want to wait to see if the Fed's lower the rate a little further, or go ahead and Refi now is up to you. Kinda like Vegas. If I was you I would definately get a Fixed rate if you intend to stay in your home. Word is, that the Fed's may lower rates a little further. Hope that helps.
Link Posted: 6/23/2003 7:35:39 AM EDT
Rates will surely rise over the next 2 years - maybe not in the next few months though. You should definitely lock-in a fixed rate right now or even wait a few weeks/months as there is some indication that rates may drop even lower.
Link Posted: 6/23/2003 8:44:45 AM EDT
Originally Posted By AR_Shorty: Rates will surely rise over the next 2 years - maybe not in the next few months though. You should definitely lock-in a fixed rate right now or even wait a few weeks/months as there is some indication that rates may drop even lower.
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I am in the process of refinancing, and rates went up today. I was hoping they would drop a little bit more. If you are planing to have the loan in a few years, better go fixed, because it is sure to go up.
Link Posted: 6/23/2003 9:36:06 AM EDT
[Last Edit: 6/23/2003 9:37:55 AM EDT by SWIRE]
Originally Posted By mejames: I am in the process of refinancing, and rates went up today. I was hoping they would drop a little bit more.
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It seems that the interest rates behave similar to the stock market in that they price in what is expected to happen before it actually happens. That is partly due to the fact that mortgage rates more closely follow the 10 year bond rate and not the feds rates. Depending on if investors move into or out of bonds on any given day, the mortgage rates will go up or down. The market has gone down the last couple days and mortgage interest rates have bumped up a little. The Fed is expected to cut by either .25 or .50 but the market new that early last week which is why the stock market went up, bonds dropped, and so did the mortgage interest rates.
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