Should I lock-in the low interest rates with a long term fixed rate mortgage? Or should I take a lower cost 3 year or 5 year adjustable mortgage rate? It all depends. It depends primarily on how long you plan to be in the house (or refinance your loan), and it depends on what your view on the future mortgage rates to be.
To help you decide, I've put together a mortgage interest estimate spreadsheet. Assumptions are in blue. To use this spreadsheet, populate the current rates on the different mortgage products by going to the following link. In terms of the floating rate, most loans are based off a spread + LIBOR. I estimated this "floating rate" by assuming that the FED was going to continue to raise rates at 1/4 point each quarter, or 1 point a year (see mortgage watch link) for a couple years before the rate leveled out at 7% going forward.
The lowest or least expensive mortgage is highlighted in bold with a yellow background. Note that products such as the 7 year adjustable are never the least expensive product for this case of assumptions.
Click to download the spreadsheet here: Download mortgage_interest_estimator.xls
It is amazing to watch money evolve from worthwhile to worthless.The United States is running the country on borrowed money. People are not succeeding in life, they are buying success and going bankrupt because they are not following any restraint or fear of loss. Their is always cheaper money to buy in the US. This is so
dangerous and I believe the value of the US dollar would crash if the actual value that is placed on our own currency was understood by the rest of the world.
www.initred.com
Posted by: Sem Prada | April 27, 2008 at 10:13 AM