Mortgage Blog

what shall we do when the rate is high?

January 28th, 2010 2:55 PM by Eric Fang

The ecomony data is consistent. And if everything goes
as expected, we will see the rate goes up slightly as
I discussed in Mortgage Trend.

The current rate is still at history low. But it is
high compared to the rates in the Nov/Dec of 2009. What
would you do if you missed the boat?

I know someone is still trying to get those low rates,
Please try not to do so(if your current rate is high)
unless you can afford losing the good rates . Then
what's options do we have now?

1)Think about 10/1ARM. If you planned to take 30 yr
fixed 4.625% to 4.75% rate and did not get it. Now you
can think about 10/1ARM.My logic is very simple:

a)10 yr is longer enough. Our life is way much better
than 10 yrs ago

b)Economic cycle is shorter than before. We saw two
recession time in the last decade(1990 to 2009). Most
likely we will see another one in the next 10 years.
And we can refinance again when the rate low at the
next recission time.

c)Your loan balance will be much less tehn and the
risk(of higher rate) will be under control.

d)You can get 10/1ARM rate at 4.5% to 4.625% for 417k
loan. Not that bad.

2)5/1ARM 3.75% to 3.875%(417k loan) still doable.
1yr LIBOR index still below 1%. We can still do the
5/1ARM loan with good rates.

3)10yr fixed or 15 yr fixed still a good option.
Those rates are still at history low.

4)For high balance loans, we may need to adjust the
expectation a little bit. While 4% for 5/1ARM, 5%
for 30 yr fixed still possible, we may have to have
an impound account for those rates.

Posted in:General
Posted by Eric Fang on January 28th, 2010 2:55 PM



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