"Expert analysts" is an oxymoron.

I personally would never use an ARM to if it was the only way to into a house. Otherwise it can be a great tool If one has to get an ARM to get a home, it is an indicator that one cannot afford a convention 30 year loan and relies on the assumption their income will go up with interest rates. It worked for some but as we can see not for a whole lot others.

My advice would be to lock in 4.5% while you can. If mortgages rates were at 8% in this economy i would wait for the inevitable 3-4% drop. In this case there cannot and will not be much more downside.

If/when you do lock in your loan, DO NOT take another initial 30 year term.
Refinance for whats left of your initial term. Try 25. You will save thousands. That has been Another mistake people make that costs them far more in interest then otherwise. Thats another few years of of paying practically interest only all over again for the first years of a new loan. That adds up even over Three years!! Try a 20 year and make some sacrifices. 15 year even better if you can swing it. Its a forced savings account with interest saved at the forefront and tax free appreciation as a bonus.

Yes your payments will go up but its money in the bank and far more is applied to your principle.But they would have gone up anyway as the rates rise again and they will. A LOT. In order for the government to spend what they are claiming they are going to spend the treasury with have two choices. Sell bonds or print money. People won't buy Government bonds with lower rates then they can get on CDs. Especially in a rising stock market which is an leading economic indicator. Interest rates have to go up.

We all should think long term with financial decisions. The market is juicy right now, Home prices are looking good. If you have any faith in this country and history proves Things will turn around. Those who believe in the gloom and doom they are being fed, are sure to miss opportunity in bad times,

Refinancing is will and should be tougher to get done. Banks are right to tighten credit. If I owned a bank, I would be tightening credit as well. The banks tried loose credit standards.......crazy ARMS, balloons,40 year loans,60 and 72 month basic car loans, and people got sucked in and did not read or understand the loan contracts then close loans without lawyers!All kinds of "hocus pocus" loose lending. People got homes. Now they are losing them. Most of those people would not have been in those homes in the first place if the 20% down tradition held.

Now demanding the long traditional 20% down is considered as credit be tightening too much!!!!Amazing,

I am not a financial expert but I will say we are not participating in the recession using common sense and sacrifice through lessons learn in the 70'late 80's and 2001.
We have become experts in seeing opportunity where everyone sees gloom and that has made all the difference.


[This message has been edited by Kingfrog (edited 01-12-2009).]

[This message has been edited by Kingfrog (edited 01-12-2009).]

Bill,
I agree - take the 4.5 and run. The so called "experts" have been wrong so many times that I would not bank my future on them. In the current environment I doubt that anyone can predict with any certainty what will happen. I remember in the 1970s the interest rates for home mortgages were at the 18-21% level. People jumped at the chance to get a 12% rate. If you do the calculations the difference between 3 and 4 percent on a monthly basis is hardly worth the worry.

Just my opinion.

Hammer

We saw the 30 yr. rates trend up today, so we called our contact and locked in the remainder of our 30 yr. note (about 26.5 years) in at 4.75%...which is 1.5% lower than our current rate was.

I told my Brother in Texas I now hold a 30 yr,. note with a 4.5 rate and he cussed at me out of jealousy, lol...

Thanks for input guys...



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Bill in Dayton

No it isn't... It's a misspelling!