Comments on: Foreclosure News Dampens Improving Economic Data http://www.loanbiz.com/blog/2008/06/05/foreclosure-news-dampens-improving-economic-data/ Loan Business News, Information, and Consumer Education Thu, 09 Feb 2012 13:03:02 +0000 http://wordpress.org/?v=2.3.2 By: richard http://www.loanbiz.com/blog/2008/06/05/foreclosure-news-dampens-improving-economic-data/#comment-564 richard Thu, 12 Jun 2008 18:10:02 +0000 http://www.loanbiz.com/blog/2008/06/05/foreclosure-news-dampens-improving-economic-data/#comment-564 Market timing is a risky, and I think fundamentally unsound, investment strategy, and it makes even less sense with regard to purchasing a home. I think you hit the nail on the head when you said that rates may be rising fairly quickly in the months ahead, but even if you and I are wrong, the general volatility of rates proves one thing -- be it housing prices or mortgage rates, conditions don't stay in one place for a while. If a family can get a house they can afford under today's conditions, it would be a shame if they missed out on that opportunity based on a guess that prices or rates might move lower still! As for options in a rising rate environment other than just getting a fixed rate mortgage, another thing to consider is getting as long a mortgage as possible. Normally, I'd advocate getting a 15-year vs. a 30-year mortgage if you can comfortably swing the higher payments, but if you believe rates are setting off on a long-term trend higher, lower rates would have more economic value if you could lock them in for a longer time. For example, if interest rates generally moved significantly higher, you could find yourself able to invest the differential between a 30-year and a 15-year payment at rates higher than your mortgage. Market timing is a risky, and I think fundamentally unsound, investment strategy, and it makes even less sense with regard to purchasing a home. I think you hit the nail on the head when you said that rates may be rising fairly quickly in the months ahead, but even if you and I are wrong, the general volatility of rates proves one thing — be it housing prices or mortgage rates, conditions don’t stay in one place for a while. If a family can get a house they can afford under today’s conditions, it would be a shame if they missed out on that opportunity based on a guess that prices or rates might move lower still!

As for options in a rising rate environment other than just getting a fixed rate mortgage, another thing to consider is getting as long a mortgage as possible. Normally, I’d advocate getting a 15-year vs. a 30-year mortgage if you can comfortably swing the higher payments, but if you believe rates are setting off on a long-term trend higher, lower rates would have more economic value if you could lock them in for a longer time. For example, if interest rates generally moved significantly higher, you could find yourself able to invest the differential between a 30-year and a 15-year payment at rates higher than your mortgage.

]]> By: Kay http://www.loanbiz.com/blog/2008/06/05/foreclosure-news-dampens-improving-economic-data/#comment-508 Kay Thu, 05 Jun 2008 21:49:15 +0000 http://www.loanbiz.com/blog/2008/06/05/foreclosure-news-dampens-improving-economic-data/#comment-508 Given the general market indicators, it seems that the rates may be rising fairly quickly in the upcoming few months. Can you provide any suggestions on how to "time the market"? Also, what other options should one consider besides just getting a fixed rate mortgage? Given the general market indicators, it seems that the rates may be rising fairly quickly in the upcoming few months. Can you provide any suggestions on how to “time the market”? Also, what other options should one consider besides just getting a fixed rate mortgage?

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