Mortgage question (nf)

[Guest Trophymuskie]

Hey I'm about to refinance my house and was wondering if it's worth looking at locking in long term. I'm leaning towards a 5 year term for 5.25% but 10 years looks good at 5.65%.

 

I'm no expert but I don't think the rates are ever going to be under 5 again and most likely will continue to climb.

 

It's just that 10 years is a very long time, the good news would be that our mortgage would be close to paid off by then.

 

Any experts out there with knowledge with the right thing to do at this time?

 

As a side note, I guess maxing it out and investing the balance would be a smart thing to do.

[Blake]

Shop around at a few instituitions for the best rate going. I played the prime markets for a while and then locked in for a 5 year term at the right time. Some mortgages like the one I had will offer the prime mortgagae with a cap but also if you decide to lock in will give you 1.35% off the posted rate. The 10 year mortgage is a long time and if you do some number crunching may or maynot be the right thing to do but 5.65% seems fair. Make a few phone calls and see what other competitors are offering.

[tonyb]

You may also want to consider using a mortgage broker. I just started using one and I don't know why I waited so long. I used to do all the running around and shopping for the best rates. That is their job and there is no fee to use a broker, the banks pay them to get your business. I think you'll find the best rates using a broker, and they could probably answer your long term mortgage question the best.

 

You might be able to find closer to 5% for 5 years.

 

Have fun!

Tony

[Terry]

it is always a crap shoot, but if you find a rate you are comfortable with

then locking into a 10 year sure allows you to plan long term knowing your major expense is a fixed rate...

[Jer]

I renewed last May (06) for a 10 year term at 5.5%. I could have got 5 years at 5% but didn't want to gamble what rates will be in 2011. I also went with weekly payments rather then monthly, saves a huge amount of interest over the term. I'll be paid off a few months before my 10 years are up.

 

Overall, I think I did pretty good on interest rates since I bought my house: 7.3% (5 year) in '96; 6.55% (5 year) in '01 and now 5.5% (10 year) in '06.

[Headhunter]

After much threatening, arm waving and other horse manure, I managed to get a five year rate at 4.95% for my new house, from one of the big banks! If you work them, they will give you deals.

HH

[Dutch]

Over the long term it has always been best to float.

 

I would not suggest locking in for 10 years.

 

Here is what my wife and I did:

 

Float with a cap, but base your payment on either a lower amortization (say 20 years instead of 25) or a higher rate. Most payments are determined with the cap rate, but if the interest rate is lower than the cap rate, you are ahead of the game as you are paying as though the interest rate is say, 6% instead of the currest rate which is around 5.5%. You will come out ahead and you don't have to worry about your payment fluctuating when the rate changes.

 

Another way to do it is just say you want to pay $X each week. As long as that is equal to or higher than the payment determined with the cap rate, the bank is fine with it.

 

Always make payments weekly! If you bank does not offer that, go to another bank.

 

I do not think the rate is going to go up quickly over the next 5 years, so I predict it will be better to float.

[Corey]

I guess my 7 year fixed at 3.75% is a pretty good deal. It's all about who ya know and who owes ya favours.

[silveradosheriff]

7 at 3.75 - U rock!!!

[Bitsmith2k]

damn you HH.. i just got my 5 yr at 4.99.. that said TrophyMuskie, if you want my brokers contact info shoot me a PM..

[Headhunter]

:whistling:

[OhioFisherman]

Certainly not an expert at it, with a long term fixed you know what you have and are protected if there should be a sudden rise in rates. I refi-ed in 2003, I was sick, didn`t know what was going on or how long it would last, and figured if I didn`t get better soon I would be living on a pension.

 

For me it was simply a matter of reducing the amount of my house payment, I went from a 15 year fixed at 7.5 percent to a 10 year fixed at 5.75 and dropped my house payment from 625 a month to 225 a month.

 

Different situation though, I didn`t owe that much, like 5 grand now, and was just because I was unsure what my income would be if I couldn`t return to work.

 

I have always made bigger payments on the principal, and don`t pay enough interest for it to be an advantage at tax time now.

 

Read the fine print on your bill though, they changed our bills and money I thought was going to the principal for almost 8 months was just paying the house payment ahead. I don`t have a house payment due until the end of August, by then it will be paid off.

[Nemo]

Fix it either 5 or 10 then focus on what you can put down on the principal each year. That is the best way to get rid of your mortgage.