Keith Gumbinger
Keith Gumbinger
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There's no way for consumers to borrow more cheaply. But that might change if the Fed raises rates a couple more times.
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Mortgage rates come down when fixed-income investors think the economy is slowing, not because the Fed cuts rates.
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Someone who will be out of their home within five years to seven years can save some money with an ARM. But you have to be aware of the reality that interest rates are likely to be somewhat to significantly higher in three years, five years, 10 years down the road from today.
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If you've refinanced in the last 18 months or two years, this movie's a rerun. Rates aren't at compellingly low levels.
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If the Fed's cuts succeed in stimulating the economy, then mortgage rates are actually likely to rise,
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Not only do you not own any of your home, but you may be piling up additional debts that could quickly exceed the value of the home. There are no guarantees that rates will remain at comfortable levels and no guarantee that home prices will continue to go up.
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If you pay points up front, it's harder to get your money back. When rates are high, borrowers have to pay points to trim rates any way they can, but with rates so low there is really no need to pay those points.
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These loans can be of value for people who want to save or invest the money they would have paid in principal, ... Unfortunately, the way the product has been pitched, borrowers have been encouraged to stretch their budget to buy more house.
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Mortgage markets have been so flush with cash that home buyers are able to layer one risk on top of the other. It's possible to borrow more than the value of the home, put in no money of your own and pay a minimum monthly payment.
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The longer the fixed rate, the more insulated you'll be.
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If you're making a pre-payment on your mortgage principal, ultimately you'll pay less interest,
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The current expectation is that he'll pick up the baton where Greenspan left it off.
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Does that mean (consumers will) stop borrowing because it costs them another $5 a month? Probably not. It may influence decisions. I don't think it halts decisions.
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For some people a home equity line of credit is a brand new shovel for digging themselves further into debt.