interest rates cut to save the economy

[maladroit]

what are they charging on a 1 year fixed mortgage? you can renew it at the lowest rate every year and pay down as much as you want without penalty

[dragonrider]

what are they charging on a 1 year fixed mortgage? you can renew it at the lowest rate every year and pay down as much as you want without penalty

I don't think they offer that kind of loan. Here is the rate page, with rates for the different types of home loans: https://www.patelco.org/rates/rates.aspx

Note: It changes all the time, so if you look tomorrow, the 30-year fixed might not be 4.625, but today, 12/18/08, it is.

[Weezard]

Well, I certainly hope that whatever they do with monetary and fiscal policy, they can avoid the deflationary spiral that caused the Japanese "Lost Decade." What we have happening now looks a lot like the same thing to me. As I recall, the Lost Decade began with a similar housing bubble to the one that we experienced. Another thing I remember about he deflation that Japan experienced was the stagnation it caused in the economy --- prices kept dropping, so people would wait to buy anything, expecting it to be cheaper in a month or so. That lowered demand, which lowered prices more, which led to more reluctance to buy. Eventually wages went down. They got stuck in a dwnward spiral.

One of the things I have noticed is that right now is a GREAT time to refinance your mortgage (assuming you can qualify). The underwritng standards may be tighter, but the rates are very good. My credit union is offering 30 year fixed rate mortgages at 4.625%! I do not know if I have ever seen rates like that. About 5 years ago, I got a mortgage at 5.625%, and I thought I would never see rates as good as that again in my life --- now it is a full point lower. I'm starting my application in the next few days.

Aloha D.R.

Dunno if the rule applies when rates get this low, but ordinarily, it does not make sense to re-fi for less than 2 points.

When you add the cost of the re-fi and the 5 years lost the deal usually goes :upsidedow on ya.
Easy check? Calculate the monthly for a 25 year loan.
If the payment is still lower than your present payment, go for the 5 more years of debt.

No matter how tricky a deal gets, and consequently, how good it looks, it pays to dig up the bottom line.

I ignore all the B.S. and calculate for total cost.
Hope it still works for ya.

Best,
Weeze. ( Cheap?! I prefer Frugal)

[maladroit]

woah those rates are lower than i can get in canada right now...i got my mortgage in late 2001, renewed it on an annual basis, and it never went over 4% (thanks to president bush)

with rates coming down, wouldn't a variable mortgage be better if a 1 year fixed mortgage is not available?

[llama shack]

This may seem deflationary but within a couple of years.... holy hyperinflation.

The Fed is just delaying the inevitable and making the inevitable even worse.


You know what would be cool? If marijuana was legalized and taxed RIGHT NOW, it would cover all these bullshit state budget defecits and a good portion of this incredible amount of deficit spending.

It'd create a ton of jobs, god damn. It really is the answer.

[dragonrider]

Aloha D.R.

Dunno if the rule applies when rates get this low, but ordinarily, it does not make sense to re-fi for less than 2 points.

When you add the cost of the re-fi and the 5 years lost the deal usually goes :upsidedow on ya.
Easy check? Calculate the monthly for a 25 year loan.
If the payment is still lower than your present payment, go for the 5 more years of debt.

No matter how tricky a deal gets, and consequently, how good it looks, it pays to dig up the bottom line.

I ignore all the B.S. and calculate for total cost.
Hope it still works for ya.

Best,
Weeze. ( Cheap?! I prefer Frugal)

Thanks, Wheeze. I agree that it would not be worth it to refi for just 1 point from the point of view of paying the lowest interest overall. But I have a few other things going on. You know how things always change, so decisions you made previously aren't working for you now? We had made accellerated payments on our 1st mortgage some time back, so it is paid down by a lot more than the 5 years we've had the loan. Then some time after making those payments we needed cash for a kitchen remodel we wanted to do, so we ran up a second equity line, which has a higher interest rate, shorter term, so a larger payment. And now our income is not what it was when we made some of the previous decisions, so we'd rather have a single lower payment, plus a bit more cash in the bank in case we have any other changes to income in the future. Really, if we had just not made the accellerated mortgage payments in the first place and kept that as cash in the bank, we would not have needed the second mortgage equity line for the remodel, and we'd have the cash reserve we want now. Funny how things work out, but it seemed like a good idea at the time to speed up paying off the mortgage.

I've done this more than once --- paid my loans down with extra cash, then needed extra cash later on and had to borrow it again, at higher rates than the original loan or with fees related to refinancing. I'm thinking I need to keep better cash reserves, even if they don't earn well.

woah those rates are lower than i can get in canada right now...i got my mortgage in late 2001, renewed it on an annual basis, and it never went over 4% (thanks to president bush)

with rates coming down, wouldn't a variable mortgage be better if a 1 year fixed mortgage is not available?

Maladroit, I've always just been more comfortable with the idea of fixed rate loans, rather than variable rate loans. Also, I am not familair with the 1 year fixed mortgage you mentioned. We've had some very exotic loans offerred by some lenders, but I have not heard of that one. Also, my credit union tends to deal in pretty traditional fixed rate or ARM loans.

Anyway, I didn't mean to threadjack this thread to discuss my personal finances. I just wanted to point out that even in an economic crisis, there are some good opportunities. Right now, if you do have access to credit, there are very cheap interest rates, and certain kinds of investments like real estate are very cheap as well. It's just harder to summon the courage to take advantage of those opportunities when you aren't sure what is coming down the pike.