Just a minute. If you have a fixed rate mortgage now,

[Skidmore]

the interest rate on that is locked in. Right? Any changes in interest rates should we go over the cliff would be those with balloon rates and new mortages. I'm not a banker nor have I played one on teevee.

[DURHAM D]

1. Yep - I thought his mortgage rate argument was over-hype.

[emulatorloo]

10. If your fixed rate mortgage is expiring now your rates will go up if Repubs cause default.

Will certainly affect anybody trying to buy a new house.

So personally I don't think it was over hyped

[DURHAM D]

11. Few are trying to buy a new house because .

the lenders are simply not lending.

[Fire1]

12. Not so. Great deals on McMansions and luxury homes.

They're taking longer to sell but they are being sold.

[DURHAM D]

14. Are you a lender? nt

[Fire1]

17. I don't have to be a lender to know this. I've recently read the

stats on what has been sold in my county.

[Marrah_G]

19. New mortgages and refies are at a huge low.

We are hoping to sell our house before it drops so low that we would require a mortgage to buy a new much cheaper remote property.

[Mosby]

22. It's a buyers market that's for sure

Here in Phoenix property is turning over quick, but the pricing seems to be the key factor to how fast the property sells.

[Marrah_G]

32. The problem is many are not getting the mortgages to buy

I work in a business where I see the mortgage data ever week in a number of states. The numbers have shrunk to probably 20 of what they were.

A good place to check data numbers is the Warren Group.

[Fire1]

27. Some were so low I'm sure they were foreclosures but quite a

few were in the low six figures. New Mortgages may be at a "huge low" but somebody is getting them.

[DURHAM D]

31. More than likely investor owners taking money out of the market

(or using their cash) in order to buy rentals or flipping. Perhaps no loans involved or a very low loan to value.

I know several people who have purchased real estate in the past 8 months with cash. There is no point in leaving it in CDs or MMAs and the market is scary.

[KatyMan]

28. There's building going on in our neighborhood and

all around it, most of the houses being built are already sold. I would imagine it all has to do with where you are.

[Ruby the Liberal]

13. Fixed rate mortgages don't "expire". Balloon loans (5/7 yr) do, but they are not "fixed"

You have a "fixed" payment for the first 5/7 years then it goes to variable/float.

That is not a "fixed mortgage", it is a variable with a fixed initial period. AKA an ARM.

[emulatorloo]

15. OK, my mistake, All I know is I am in the midst of frantically getting my mother-in-laws

a new mortgage, as the interest rate of the old one has just expired.

You are correct, i just had the wrong terminology for it.

[Ruby the Liberal]

16. Be very careful with Balloon notes

The only people who should even consider them are folks who are already planning to move before the note comes due.

If you can't get affordable payments on a 22 or 30 year fixed plan, buy less house.

Sorry if that sounded like a lecture - my industry has screwed so many people over on this over the years that I almost feel compelled to make up for it by being even more conservative in recommendations than I would have been in years past.

[emulatorloo]

26. Didn't sound like a lecture to me at all. I appreciate the advice.

We refinanced our house on a 30 year fixed when Obama got those lower interest rates for homeowners in 2009.

We did a 5 year balloon on my mother-in-law's place because she is in her mid 90's and were expecting she would need to go into assisted living before the 5 year period. Happily she is still going strong.

[Ruby the Liberal]

29. Another very good reason for a 5 year.

If shes in her mid-90s, you may want to consider it again as it will keep costs down.

[coalition_unwilling]

20. Fixed rate mortgages by definition cannot go up. They're 'fixed'. - n/t

[mike_c]

2. as I understand it, you are correct-- furthermore, if inflation goes up...

...you get to pay off your note with worthless dollars, i.e. if your (fixed rate) mortgage payment is $1000, it will remain $1000 even if inflation makes that the cost of a loaf of bread at the supermarket. Of course, that also means that if you have $1000, you'll have to choose between paying your mortgage or eating....

On the other hand, if you have an adjustable rate mortgage, bend over and grab your ankles.

[snooper2]

3. Yes, that's why you always get a fixed rate mortgage...The rate will not change

There may be 1% of cases where a variable rate makes sense...


The same with "leasing" a car :eyes:

[Mosby]

25. The general rule

is that one should go with a fixed rate when rates are low and a variable rate when rates are high. What actually happens though is that when rates are low some people cannot resist the super low variable rate compared to the fixed rate.

[still_one]

4. Generally true. Those with adjustables may also be affected more immediately, depending how

frequently interest rates are adjusted for them, their caps, and max

[kirby]

5. ARMs would be impacted...

Most adjustable rate mortgages recalc the interest rate periodically such as once per year, so it would not be immediate. However, credit card rates and such would immediately rise. One positive is that banks might pay a higher saving rate. Whether that is enough to counter inflation is another story.

[tammywammy]

6. And the people looking to purchase a house.

Further slowing down the housing recovery.

[dkf]

7. Adjustable mortgages and helocs too.

It could drop the value of homes also.

[Jazz Ambassador]

8. Yep. But I suspect the poorer you are

The more likely you are to have an ARM mortgage. It's amazing to me how many ARM mortgages are still out there, and how hard the mortgage industry is still pushing them. I bought a place last year, and even with sterling credit and the ability to put 20% down I still found myself having to demand a fixed rate and push back against ARM offers.

[Ruby the Liberal]

9. That is correct. It is locked for the life of the mortgage, same with fixed car loans.

Hopefully, most people in floating rate mortgages refinanced into fixed when the rates bottomed out the last few years.

Credit cards is another bullshit argument. Whose card ISN"T already at 20+ %? They bumped the interest rate before the Credit Card legislation took effect. They are limited as to how badly they can screw people now and how often.

The challenge is going to be anyone needing to initiate credit.

[mrmpa]

18. I don't think he was talking about current mortgage rates, but

those people shopping for a mortgage will find rates climbing.

[Lone_Star_Dem]

21. I believe there's been a huge increase in ARMs. Something like a 30% increase in the last decade.

Those, along with any balloon payment mortgages which would need refinanced, are the ones who would be impacted by an increase in the Prime.

[dmallind]

24. Which is insane, considering rates have been very low in the last decade

I laughed at someone who tried to sell me an ARM when I bought my house in June with a 3.5% fixed rate. Exactly how much lower did the idiot think I should have expected the rate to go? The time to buy ARMs is when rates are high. They haven't been high at all in nigh 20 years, or really high for 30 some.

[slackmaster]

23. Correct. My first mortgage is fixed, but my second (a HELOC) is variable

Right now it's at about 4.25%. If rates start to go up, I'll roll the balance into a fixed rate note.

[pitohui]

30. yes if you have a fixed rate mortgage you have a fixed rate mortgage

the interest rates have already dropped off the cliff, i don't know how they can crater any more than they already have

you can always refinance if you wish, i suppose, but i don't see them going any lower

we could actually do w. a rise in interest rates, to stimulate savings, right now it's dumb ass idiotic to save money, you're losing money to inflation at today's pitiful interest rates

if there was ever a time when "debt is good" it's when the interest rates are this depressed, that's why i'm puzzled about all the screaming about the debt, why WOULDN'T you want to hold debt when the interest rate is trivial? might as well make some improvements in the country's infra-structure, create some gov't jobs, and so on while the cost is low

the whole thing seems like a very fake manufactured crisis to me, worry about debt when interest rates are high, not when they've cratered