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Please help...which rate do you think will be best?
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Author:  fran [ Thu Jan 26, 2012 10:05 pm ]
Post subject:  Please help...which rate do you think will be best?
Im seriously considering this 2.99 fixed rate for 4 years. Im locked into a 5 year prime minus .45 variable and im wondering if this is better considering the rate environment will stay low for the next couple years, but the 2.99 fixed is tempting. I know people have asked this type of question since the beginning of time, but the rate environment has changed cuz we've never had rates like this before.

what do people think?
Author:  christinajackson [ Fri Jan 27, 2012 7:33 am ]
Post subject:  Re: Please help...which rate do you think will be best?
Hi Fran,

It would be helpful to know your mortgage balance and your amortization to give the best advice....

The spread is small at .44%. If you have a small mortgage and are agressively paying it down the lower rate will give you a chance to reduce your interest cost and pay the mortgage down quickly. However, if your mortgage is higher, you may want to consider locking in at the 2.99%. 44 bps is not a huge cost to have peace of mind for the next 4 yrs.

If you want to compare interest savings or would like advice tailored to your specific mortgage feel free to give me a call.
Author:  christinajackson [ Fri Jan 27, 2012 7:34 am ]
Post subject:  Re: Please help...which rate do you think will be best?
One more thing....when does your p-.45% mature? If it is soon that stregthens the case for the 2.99% since you likely will not be renewing into p-.45 any time soon....
Author:  fran [ Fri Jan 27, 2012 10:09 am ]
Post subject:  Re: Please help...which rate do you think will be best?
thanks christina for all your advice.
the mortgage is about 350 all in and i hope to be paying extra but not much more than a couple payments worth a year with a 30 yr amortization. I'm not sure what you mean by maturation? Im locked in till june with the variable and i just received a firm closing date of april 25th. so i have the option of both as i would close by the required date for the fixed.
Author:  PaulMeredith [ Fri Jan 27, 2012 3:08 pm ]
Post subject:  Re: Please help...which rate do you think will be best?
Hi Fran,

Since you already have a commitment in place, I wouldn't go jumping into anything too quickly with your closing not being until April. The best deals are typically found 30 - 60 days before closing, and bond yields (the primary factor in determining fixed mortgage rates) have been extremely low for the past 6 months, and I certainly don't expect them to start skyrocketing any time soon (and they would have to go up substantially before we see any upward movement in fixed mortgage rates). Not only that, 2.99% for a 4 year fixed is actually 'expensive' in today's market believe it or not. I would hold on a little while longer before making a decision and see if any other nice mortgage rate surprises come up ;-)
Author:  fran [ Fri Jan 27, 2012 6:54 pm ]
Post subject:  Re: Please help...which rate do you think will be best?
thanks paul. thats interesting. I do feel a bit force fed by this 2.99.
Author:  PaulMeredith [ Fri Jan 27, 2012 8:13 pm ]
Post subject:  Re: Please help...which rate do you think will be best?
No problem at all Fran. I have had a 4 year fixed at 2.89% available since August, so it is really nothing new, and there could possibly be even sharper rates to come.
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