4 ms·
Why don't you get fixed rate so that the rate never goes up. When the background rate goes down you refinance for another lower fixed rate.
by kilgnad 4y ago
Why don't you get fixed rate so that the rate never goes up. When the background rate goes down you refinance for another lower fixed rate.
- sokoloff 4y agoIt used to be the case that the adjustable rates were lower than the fixed rate. When a 30-year fixed was 8%, a 5/1 (5-year fixed, then adjusting every year) mortgage may have been 5% and a 10/1 may have been 6% for the fixed period. Once fixed rates got down to the 3-4% range, that seemed to no longer hold and I was frequently offered fixed-rate jumbo mortgages at rates slightly lower than adjustables (I have no idea why they even bothered to quote an adjustable at that point). If you could get a 10/1 cheaper than a fixed-30 and were pretty sure you'd be moving in 7 years, that's why someone would take out an ARM. (Or, if they could qualify for the ARM but not the fixed-rate payment.)
- pc86 4y agoWhen have adjustable rates for the same property and money down been higher than fixed? They'd sell approximately zero adjusted rates if that ever happened.
- sokoloff 4y agoDec 2008-May 2009 and July 2020-Feb 2021 (for much of early pandemic, I was looking to refinance to lock in an even lower rate that I already had; I didn't manage to lock in the absolute low, but ended with ~3%) https://fred.stlouisfed.org/series/MORTGAGE30US https://fred.stlouisfed.org/series/MORTGAGE30US https://fred.stlouisfed.org/series/MORTGAGE5US https://fred.stlouisfed.org/series/MORTGAGE5US You do see a sharp reduction in ARM mortgages as a share of total with the interest rate reductions post 2008: https://i2.wp.com/financialsamurai.com/wp-content/uploads/2022/03/adjustable-loans.jpg?fit=1456,9999 https://i2.wp.com/financialsamurai.com/wp-content/uploads/20...