Is a 30 year fixed loan the way to go?
If you are currently loan shopping...
The big question is where do you see interest rates heading? You may be the type of person that prefers to sleep through the night and know what your payment will be, in that event the 30 year fixed rate loan is the option, consider the programs that allow for a 30 year amortization with a 10 year recast to market (assuming that in 10 years you will have moved or refinanced). Typically these rates are less than the fully amortized 30 year loans.
The big question is where do you see interest rates heading? You may be the type of person that prefers to sleep through the night and know what your payment will be, in that event the 30 year fixed rate loan is the option, consider the programs that allow for a 30 year amortization with a 10 year recast to market (assuming that in 10 years you will have moved or refinanced). Typically these rates are less than the fully amortized 30 year loans.
You do want to prequalify with a lender to make certain that you understand the myriad of loan options. There is also a mortgage affordability calculator that is easy to use. Personally, I don’t see how interest rates can increase too much in the near future because there are so many homeowners that are “teetering” on the edge of being able to make their payments. Many of their loans are coming up for recast (recast to current market rates through a refinance).
As of June 30, nearly one in four subprime loans that Countrywide services were delinquent. Almost 10 percent were delinquent by 90 days or more, compared with last year’s rate of 5.35 percent.
As of June 30, nearly one in four subprime loans that Countrywide services were delinquent. Almost 10 percent were delinquent by 90 days or more, compared with last year’s rate of 5.35 percent.
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3/8/2009 1:49 PM
Los Angeles Real Estate Blog wrote:
There is an abundance of unfamiliar terminology involving the current mortgage crisis, and a lot of confusion and opinions as to how we got where we are today. Subprime Loans: Riskier loans were made at higher interest rates. These loans were desired by both banks and Wall Street as the higher interest rates offered investors a higher yield. Problem: Obviously the higher interest rate and fees did not offset the risk, as evidenced by today’s mortgage crisis. Alt-A loans: Alternative underwriting, no income or asset (down payment) verification. Loans with higher interest rates were ... -
3/9/2009 7:13 AM
Los Angeles Real Estate Blog wrote:
There is an abundance of unfamiliar terminology involving the current mortgage crisis, and a lot of confusion and opinions as to how we got where we are today. Subprime Loans: Riskier loans were made at higher interest rates. These loans were desired by both banks and Wall Street as the higher interest rates offered investors a higher yield. Problem: Obviously the higher interest rate and fees did not offset the risk, as evidenced by today’s mortgage crisis. Alt-A loans: Alternative underwriting, no income or asset (down payment) verification. Loans with higher interest rates were ... -
3/9/2009 7:20 AM
Los Angeles Real Estate Blog wrote:
There is an abundance of unfamiliar terminology involving the current mortgage crisis, and a lot of confusion and opinions as to how we got where we are today. Subprime Loans: Riskier loans were made at higher interest rates. These loans were desired by both banks and Wall Street as the higher interest rates offered investors a higher yield. Problem: Obviously the higher interest rate and fees did not offset the risk, as evidenced by today’s mortgage crisis. Alt-A loans: Alternative underwriting, no income or asset (down payment) verification. Loans with higher interest rates were ...
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