Boring mortgage question

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• ℱᵃƖ🐝Ɩᵃʗყ Jan 21, 2014

  Interesting that by far the majority of people, both in thread and by pm have said fixed is the way to go. I'm surprised. I thought for sure it would be a much or balanced discussion, with pros and cons on both sides.
• The Saw Jan 22, 2014

  Some good advice given, along with some bad. The right choice really depends on your specifics, which include the term you expect before you plan to sell, your equity in the home, the rates and types of loans you can qualify for based on your credit rating, and the costs to stay with your current lender versus refinancing with a new lender (and their points/interest rates), among other things. Even if rates do rise, if your term is expected to be relatively short and you can qualify for a good variable rate with low origination fees, a variable rate could be lower than the fixed rate you would pay over the same term. Variable rate loans usually have a max increase per year which protect you from big rate hikes. Sit down with a mortgage broker you trust (or get a referral for one) that has at least a few options they can sell you, and then talk to your current lender and compare. Time shopping now will pay for itself.
• TΛLLY Jan 22, 2014

  The Saw wrote:

  Some good advice given, along with some bad. The right choice really depends on your specifics, which include the term you expect before you plan to sell, your equity in the home, the rates and types of loans you can qualify for based on your credit rating, and the costs to stay with your current lender versus refinancing with a new lender.
  Sit down with a mortgage broker you trust (or get a referral for one) that has at least a few options they can sell you, and then talk to your current lender and compare. Time shopping now will pay for itself.
  

  Best advice, find an independent Mortgage Broker!

  If you were in Aussie a fixed rate the best way in current economy.
• ☣ƁΞͫNͣƉͩΞЯ☣ Jan 22, 2014

  Vote for fixed. Anybody remember the housing "bubble"? To many people buying on variable basis and rates went up catching people with way more mortgage than they could afford.
• The"Accountant" Jan 22, 2014

  As The Saw said assuming the US is similar to the UK. It's all well and good fixing but not if you fix on a higher rate and your LTV improves meaning your eligible for lower rates in the future.

  If your selling long term fixed products have greater penalties.

  If you fix for 5 years now and interest rates go up in 2 you have overpaid for 2 years and reduced the time you can take the 5 years into. I.e interest rates are 0.5 now and remain at 0.5 till 2016 then you could fix from 2016 to 2021. If you are on a 5 year fixed you will come off in 2019 and interest rises may have increased significantly between 2016-2019 but you'd be stuck (albeit at a known rate). 👍
• Mr,Shush Jan 23, 2014

  Interest rates will climb but only as high as what your fixed would be at the very most !!
• Mr,Shush Jan 23, 2014

  The"Accountant" wrote:

  As The Saw said assuming the US is similar to the UK. It's all well and good fixing but not if you fix on a higher rate and your LTV improves meaning your eligible for lower rates in the future.

  If your selling long term fixed products have greater penalties.

  If you fix for 5 years now and interest rates go up in 2 you have overpaid for 2 years and reduced the time you can take the 5 years into. I.e interest rates are 0.5 now and remain at 0.5 till 2016 then you could fix from 2016 to 2021. If you are on a 5 year fixed you will come off in 2019 and interest rises may have increased significantly between 2016-2019 but you'd be stuck (albeit at a known rate). 👍
  

  Great shout Acc. Variable all day long
• 〓 ZONE 〓 Jan 23, 2014

  I have fixed rate on my primary residence for stability in my household bills for budgeting... And have variable in my rental property.

  It all depends on personal preference I'd say. If you want to know what your bills are guaranteed for the mortgage term, then go fixed. But you can save money by going variable, with the possibility the rates could rise. Usually the lenders will give you notice if they're going up.

  Another factor to consider is if you plan on possibly selling the property in the term. The penalty is less in a variable term mortgage.

  Just a few things I've learned from experience. Hope it helps!
• Jackie West Jan 25, 2014

  Live in a van, down by the river. No mortgage necessary.

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