One of the stupidest things now, keeping people from refinancing good loans at lower rates, is the cost of refinancing. Look at some of the mortagage calulators and some of the closing costs, with excellent credit, are running between $7000 and $10000 dollars. If you have two mortgages, fixed and possibly 15 years term, as I have, you get charged more interest because the second mortgage is considered a cash out or cash back, even though you are just putting both loans together. I want to do it because when I first had the house built in 1980, I had to close at 18%, due to the last large inflation.

Young people buying now should be aware that when you are ready to buy and the interest rates are high, you will be guessing everytime the rate drops that it will never go lower and the banks and media will tell you over and over again that it will never go below double digits. Consequently the closing costs are repaid everytime you try and lower your rate to a lower interest, adding on to the principle or amount owed, but lowering payments or interest in the long run.

Now, the credit card companies are doing the same thing. Raising the low rates you may have enjoyed for years due to good payment etc, so you have to make the decision of whether to change to a lower interest card, but pay the transfer fees that add to the basic principle or base that you owe. Its a racket, and the banks and direct lenders are making money on the closing costs, origination fees etc. regardless.

This article is absolutely correct about staying away from ARM's, but it is optomistic in saying there may be "a bump down" again in the interest rate before inflation hits and they continue to raise. That is the delema of everyone who has been researching and watching to refinnace for any reason. Normally if a interest rate stays steady for a while the points and origination fees go down also, but that has not been happening now. If you are concerned about having more money each month, when inflation hits or when oil and heating and taxes go up, then bet on the rates now and go for it, because there is no guarantee that they will sink again, if only for a short time. If you are comfortable with the loan you have and feel you can gamble, wait and see they may sink again.

The truth is older people who went through the last big inflation, know whats coming. A ARM that doesnt escalate for 5 years, and guarantees a maximum of 3% climb at the end of that time, could still add hundreds of dollars to your house payment depending upon the principle owed. A ARM with no limit on the increase could conceiveably jump by 18% or to whatever the fixed interest rate climbs to during inflation. Going up or going down, its a gamble and you will pay lots in closing costs, no matter what you do. Though some states are much lower than others, and buying a older home by owner, in some places can cut closing costs to nothing except attorney fees.
In all cases do the math yourself, at home. A ARM 1% increase on a $200,000 dollar mortgage, can eat up 5 years of minimum wage increases and more. Banks are not marketing the fixed rate loans with the same ferosity as they did the ARM's just 3 years ago. There is a reason for this, and don't be fooled by the low payment now sell, if this comes back or you look into existing ARM's. The writer of this article is right on when he says it's essentially a bad deal. I hope hes right about it bumping down again, maybe. But sometimes a bird in the hand is the best bet, and in 1985 after two refinances down, nobody ever thought the rates would go below 12% again. Shows how much anyone knows when it comes to stock markets and government.

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Adjustable rate are the nightmare of any borrower regardless of the situation , The bank and not the consumer always win big , sadly they , as money manager have reacted just like some famous TV personality they gained weight and became underperforming , resorting to every tax payer to bail out their scheme . we would be better off if we could borrow the money from the government direct, which is what we are doing at this time , without paying for orgy in some luxurious hotel here or abroad ........and that's a fact.

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they need to put the subprime loans back again but cap them no one in this country is selling homes or buying homes because of our dear president god bless this country !!! then people wil go out and spend on there homes this will have a domino affect to the stores and create jobs if the goverment locks down everything where do you think this country is gonna be with no cash flow the dam banks dont lend small businesses are falling homes are just sitting but the rich keep getting richer ! dont blame the american people thats all i read about how some can afford there mortgages great you got lucky !as time goes buy some are not so lucky blame your dam goverment they dont help the standard all american working class people i can go on and on and make a list of what is killing our country your goverment!!!!!!!!!!!!!!

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