Is there a possibility that it might go down… as we are thinking of buying a new house with Interest only pmt but pay as though we have a 30 yr fix as it will go more towards the principal than say a Fix 30 yr. Advise
Is there a possibility that it might go down..
Anything is possible. It is just not probable. Rates will probably stay pretty steady. They will probably not adjust much until after the next election. At that point it is anybodys guess it will all be based on current economic conditions.
I’m thinking up. Banks are getting hit hard with all of this subprime mess, I can see rates going up to cover their losses somewhat (for the companies still in business).
Anything is possible. It is just not probable. Rates will probably stay pretty steady. They will probably not adjust much until after the next election. At that point it is anybodys guess it will all be based on current economic conditions.
If I were speculating I would have to side with mdhaas. I think that with the massive amounts of foreclosures, banks (Fed) will keep money as low as possible in an attempt to keep some transactions rolling and not force a full blown depression. I am looking at some type of attempt by Lender’s to “refi” or extend all of those ARM’s that are adjusting.
Of course, this is just my opinion. I do not see the end of the world coming like some of those “prophets” posting on this site.
Tee Hee :rolleyes
The only way this is true is if the interest rate on the interest-ony product is lower than the interest rate on the fully-amortizing loan, which I doubt is the case. It all sounds so good in theory to have a lower required payment, thinking that you’ll make voluntary principal payments. My guess, however, is that you could end up doing what many people do, and that’s find other uses for the cash and make only the minimum (interest-only) payment, in which case your loan balance will never go down. I’d probably opt for something where you’re more sure to put at least bit towards your principal.
No one knows where rates are going. If we did, we’d all be trading futures contracts and making millions. If you think you’ll have an opportunity to refinance in the next seven years at a lower rate than today, then look for a product with a shorter maturity, but even then only if the rate is lower enough than a traditional 30-year product to compensate you for the risk.