Home mortage rate direction?

[Gale Hawkins]

After Friday's S&P downgrade of USA debt and this morning down grading of Fannie Mae, etc debt rating some are saying get rid of variable rates and get into fixed rate home loans.

Any one with long term experiences in home loan rates. I know in 1981 CD rates hit near 20% right after we got married.

 

[riptides]

I view variables as a short term, say under 5 year, tool.

Fixed for the 10+ year investment.

That said, I don't think the market will go any lower, in mortages, and even if it did, LTV and equity remain to be a huge problem to solve for the masses.

 

[oldnslo]

After Friday's S&P downgrade of USA debt and this morning down grading of Fannie Mae, etc debt rating some are saying get rid of variable rates and get into fixed rate home loans.

Any one with long term experiences in home loan rates. I know in 1981 CD rates hit near 20% right after we got married.

If and I say IF you believe the economists on TV you can expect to see a rise in interest rates soon. Talking to my financial advisor she is telling me to get rid of any "floating" interest debt and pay off any credit cards ASAP. I will be the first to admit I am no expert, that is why I am paying for one..

Roy

 

[dave1949]

After Friday's S&P downgrade of USA debt and this morning down grading of Fannie Mae, etc debt rating some are saying get rid of variable rates and get into fixed rate home loans.

Any one with long term experiences in home loan rates. I know in 1981 CD rates hit near 20% right after we got married.

That can be difficult from what I hear. My son had a fixed mortgage and an ARM, a good ARM, not the rip-off type. When rates went low, he decided to refinance the whole thing with a single fixed rate loan while adding cash to his equity at the same time. He could hardly get a bank to return his calls, took over a year to get it done and lots of silly paperwork along the way.
Dave.

 

[Gale Hawkins]

I agree interest rates only have one direction they can travel in.

This time around if there are interest rate hikes and NO salary increases to off set it it will bite harder. We know not to expect any cost of living increase to be reflected in any government checks. This is the way to cut entitlement programs without cutting them directly.

 

[riptides]

That can be difficult from what I hear. My son had a fixed mortgage and an ARM, a good ARM, not the rip-off type. When rates went low, he decided to refinance the whole thing with a single fixed rate loan while adding cash to his equity at the same time. He could hardly get a bank to return his calls, took over a year to get it done and lots of silly paperwork along the way.
Dave.

I lived through a recent FHA refi.

Barely.

To think of the level of effort involved, a lesser person would have walked. It was a flipping comedy of errors and if there was an alternative given, it was bankrupcy.

Unreal.

 

[tcartwri]

With the number of people living paycheck to paycheck, an interest rise would be an all out disaster. It will be the last thing they do, however they will keep threatening to do it to try and keep people from further over financing.

 

[dave1949]

I lived through a recent FHA refi.

Barely.

To think of the level of effort involved, a lesser person would have walked. It was a flipping comedy of errors and if there was an alternative given, it was bankrupcy.

Unreal.

Yeah, his biggest comedy was that since he holds a small portion in an LLC for his job, it's a venture capital funded software product, the bank wanted complete info on the entire LLC. He told them he couldn't release that info even if he had access to all of it. So, then he asked if the loan could be approved on the DIL's income alone, they looked at that and said, okay.

On the other hand, my less prosperous son and fiance bought and moved into a short sale house in four months. I think part of their loan was gov't backed due their income levels, although they both work hard at steady jobs. There were three sign-offs needed for the short sale; the seller, the seller's bank servicing the mortgage, and finally the bank that actually held the paper on the mortgage.

Just from my kid's experiences, I would expect it to be a 'process'. :laughing:
Dave.

 

[joemd11]

We re-financed last spring and it was a long and tedious process. Mounds of paperwork and photocopies of w-2's, checks, etc. The guy that appraised our house went thru every room taking pictures. Things are much tighter now and I think that is good. As far as rates go, I think they can only go up. When and how much they go up??????

 

[Gale Hawkins]

With the number of people living paycheck to paycheck, an interest rise would be an all out disaster. It will be the last thing they do, however they will keep threatening to do it to try and keep people from further over financing.

Tim when you talk about "they" are you talking about China. Based on the press this morning they are not happy about holding all that degraded paper and are demanding change by Congress.

Who is going to lend us the $2.4 trillon we decided to borrow last week. Our lenders and not our goverment will be setting future interest rates.

Keep in mind the Chinese may think the cheapest and fastest way to becoming the next #1 world power will be to eat the USA debt they hold vs. building up a world class military machine to become #1 by force.

At this point I am clueless how the Chinese government looks at the long term picture. Right now we are offering them the USA jobs in exchange for loans from them. They do know what have to the Soviet Union military when they ran out of cash. Do they expect the same of the USA military war machine.

Some day something is going to give but what and when I do not know. Since they have us on the ropes offically as of last Friday who knows what happens next. We may get a clue at the next sell of US debt paper.

At what interest rate will be telling. ANY up tick will tell us their thoughts I expect.