Bernanke: Interest Rates Won't Go Up Until...

dave_donhoffOctober 15, 2010

[X-posted at BaSH]

Pay Attention: Bernanke Just Told You Interest Rates Won�t Go Up Until...

2012 (or later... even MUCH later...)

http://www.cnbc.com/id/39685896

Got that? The FOMC needs to figure out how to tell the market that it is going to keep interest rates lower for "longer than markets expect."

MORAL:

If you wish to retire as much debt as possible, *NOW* is the time to exploit the dirt-cheap variable interest rate loans, and apply the savings either to principal or (preferably) your secured Mortgage Freedom Accounts.

Paying interest premiums for rate protection in the coming 3-5+ years is likely good money flushed down the tubes.

Dave Donhoff

Leverage Planner

Here is a link that might be useful: Pay Attention: Bernanke Just Told You Interest Rates Won�t Go Up Until...

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bushleague

Yea I read this on Forbes this a.m., I'm toying with a five year at 2.75%...hmmm.

    Bookmark   October 15, 2010 at 5:06PM
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covingtoncat

Actively searching for re-fi currently. We plan to be in this home for at least the next 10 years. Spouse and I are in mid-late 40's with 3 kids still to put through college (one currently in, one goes next year and the last 5 years from now). Is this something we should be looking into?

    Bookmark   October 15, 2010 at 10:04PM
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Billl

" Is this something we should be looking into?"

You should definitely be at least looking at it. Fixed rate mortgages are also very good deals right now.

As for whether you should go with a variable rate or fixed rate, that should (mostly) be a numbers driven decision. The risk in a variable rate loan is that rates will go up. The gain is that you will pay lower interest for the next 3/5/7 years. If you think it is going to take 20 more years to pay off your house, then the risk is substantial. On the flip side, if you can use the monthly savings from a lower monthly payment to rapidly pay down your mortgage, then you cut that risk down to almost nothing. That is the key though - saving or paying down the mortgage.

One warning - if you are planning to refinance to free up money to pay tuition, then definitely stay with a fixed rate mortgage. You don't want to be hit with a higher mortgage payment right as your 3rd starts college.

    Bookmark   October 18, 2010 at 9:10AM
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covingtoncat

Thanks Bill. In all likelihood it will take us at least 20 to get it paid off. Knowing how we are, most money saved in monthly payment would be spent elsewhere. For example paying off debt, college expenses, home upgrades etc. I'd like to say different, but ..... realistically, no.

    Bookmark   October 18, 2010 at 6:04PM
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