Welcome to the cold reality. A lot of people selected short-term interest rate product and are now beginning to see how these things benefit the lender. |
What is new today is that lenders are allowing for the layering of risks on top of one another, ... What we don't know is what if we put all these risks together and put them in a rising interest rate environment, a declining housing market, or a weakening economy. |
What is new today is that lenders are allowing for the layering of risks on top of one another. What we don't know is what if we put all these risks together and put them in a rising interest rate environment, a declining housing market, or a weakening economy. |
Whenever business slips a little, lenders trot this stuff out. |
With rates as low as they are people can cut years off the mortgage for the same monthly payment. |
You could go to almost any lender and for no fees find yourself with a decent rate. |
[But all of that has changed in just a matter of months.] Lenders don't have people beating down their door for their loan, ... You're more in the captain seat than you were even a week ago. |
[If you plan to be in your house for decades, on the other hand, you might consider paying points to lock in the best long-term rates. Points, which cost one-half of a percent to 1 percent of the loan and are paid up front, let you buy a better interest rate. ] 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. |
[The risk with an ARM is that when interest rates rise, you could end up paying much more than you bargained for.] You're subject to the vagaries of the market, ... You want to maximize the fixed-rate picture to match your time frame. |