Busy day, sorry.
I’ve only been on this board about a week. Is there a way to communicate directly/privately or do I post my contact info ?
I don’t want to SPAM or be inappropriate.
The “general” track is the 10YR bond (TNX) and Prime lender rates change daily. or even intra-day. There are locks available from 15 day to 60 days with a .50% spread, although the great subprime deals are floor rates and didn’t change at all in last 7 days. (!?)
Without being funny, before being able to quote accurate rates, I need answers to about 20 questions.
Most people don’t ask these questions, and it just leads to misunderstandings and incorrect quotes.
If you plan on keeping a loan for at least 5 years, I strongly suggest looking at buying the rate down, if the funds are available. You lock in a lower rate and payment for the life of the loan. (Some make sense at 2.5 years others take longer to pencil out)
For a fixed amount, you get a lower fixed rate for the life of the loan. It’s all about security and insurance. You can buy rates down into the 5’s today, whether or not it makes sense is up to you. The long term benefit is there.
Example: 400K IO loan has payments of $26,000 YR
Is it worth paying $12,000
to have annual payments of $23,500 instead ?
You save $1800 YR (gross) Simple breakeven is almost 7 YRS, it’s actually better than that.
(The buy down could be as little as $2,000 to save $375 YR, gross breakeven of 5.33 YRS)
If you plan on keeping the loan long term without refi’ing, it’s a great option.
Many/most loan folks make money on the back end of a loan without telling you (Rebate, YSP, etc) by overcharging in rate.
MORE IMPORTANT, If you buy the rate down, they CANNOT make a penny on the back end; it’s impossible to overcharge AND undercharge at the same time. Most people never get the option to buy down the rate because of this.
So for a fee, you can get the long term rate and payment that you want, fixed for up to 30/40 years, without waiting for a market low.
As you know, timing the market is near impossible. Most people don’t get the lowest rate possible at the time they got their loan anyway.
My general advice to everybody is to ALWAYS have some liquid CASH funds that you can get to quickly, over and above Stocks, Bonds, CD’s and retirement accounts. There is a great sense of security in money in da bank. If it takes an I/O loan to be able to do this, so be it.
It’s amazing the number of people who are in a rush to pay off a mortgage, but have no cash and don’t enjoy their life.
IMO, it’s poor choice. Life is for living.
