Wow! I can not believe no one listens. Well here we go again PLEASE learn. I just had another client get taken over the coals with large penties and maybe not even have the ability to pay off there mortgage. Yes, you just won the lottery and the lender said, NO! You can not sell your property. This lender is what we call a secondary lender. They offer a product that sounds great and for a small rate change, you the buyer get BURNED! Rate is not everything, and for 5 or 10 basises points you get $11,000 in fees (a basises point is .o1 on the interest rate). Was that a great deal? even if you borrowed the maxium you can for a owner occupied home (1,000,000) it would not make sence.
Most people borrow in the 300,000 to 400,000 range for single family. Terms are important, payout costs, renewal costs, can you pay down your mortgage faster and all important features. Most of the top 10 lenders in the country have favorable terms.
Now do not get me wrong, there are times when these secondary lenders are needed, but please, read the mortgage documents and what you are getting into. Anyone that knows me, knows, i have used these lenders for certain situtations, but i know, i was paying a higher interest rate, big fees to renew, and huge fees to pay out early. Most people do not and again, PLEASE learn.
Look at it this way, do you have cash to buy the home you want to buy? if the answer is NO, then pay attention to what you are doing, I know in the excitment of buying a home it is easy to over look.
In November, the 5 year fixed rate was 2.14% if you were lucky enough to renew or purchase at that time congratulations you received the lowest rate EVER!
The interest rate decline is OVER, not that it will be 5% by July but you will renew in 5 years at higher rates. In 1981 interest rates peaked at 21%, that is correct, that was 36 years ago and for the most part rates have gone down. The easiest way to protect yourself is pay your mortgage off faster, I have always recommeded a 20 year amort. insted of 25, why? when you come up for renewal you only have 15 years to go, and in most casees you are making more income.
If this has you concerned, go the Zoo and watch the penquins, this will make you happy. Then make a plan, and remember, the banks have gone loopy, but you need the mortgage to buy the home.