Fixed 30 year Mortgage at 4% – Would you buy?
The details are a little fuzzy at this point, as they often are with government involvement in financial measures. But the Senate is apparently going to try to push through a bill that will encourage lenders to offer fixed rate 30 year mortgages at a stunning 4%. “If” the bill passes, and “if” lenders actually offer this ( there is no guarantee ) – would you considering buying a house? No matter how you slice or dice it, a 4% mortgage is very cheap money. However, would it be enough to temp renters into buying in this tough market?
I’m thinking as a whole, this mission might fail miserably. Most folks are either scared of losing their jobs, or of house values plumetting even more. Both are very real, very understandable fears. Taking on $200k worth of debt at 4% may not be smart if you lose your job a year from now, or if the home’s value drops to $160k. On the other hand, if you buy at the right price in the right market, and have a reasonably stable job, 4% is going to be tough to pass up.
Don’t forget about refinancing
The lucky few who have equity in their homes ( lucky? Perhaps I should say smart few ) won’t want to forget about refinancing. If you have a fixed rate higher than 4% ( anyone with a mortgage ) , and enough equity to refinance, this could be a relatively easy way to save quite a bit of cash every month, and many thousands over the long term. If the measure passes and is effective, I’ll pursue a refinance. Likely I don’t have enough equity to do so, but I will at least give it a shot to see how it pans out.
February 2nd, 2009 at 7:40 pm
I would have to consider it. I have thought about refinancing now but we are 5 years into 30 years and do have a fair amount of equity now, our area has not been hit like other regions of the country.
My biggest reason stopping me is I don’t want to extend the term of the Note. If I could get a new better rate without extending the note, then I would be interested and actually the 15 year loans are real close to having the same monthly payment and cutting 10 years off. That perks my interest!
February 2nd, 2009 at 10:12 pm
You could always get the 30 year note, and continue making the same payment you are now ( with the additional going to principle ). That way you cut way down on your interest payments, cut down your term ( as long as you stick to your payment ), and you also have the flexibility of a lower payment if you *need* to cut back on expenses.. job less etc. Best of all worlds, you know?