Luck Homeowner's Adjustable Rate Reset to Be Lower
|
We always hear the ads over the radio calling home owners to refinance their mortgage into fix-rate mortgages before the interest of their adjustable-rate mortgage's interest expires, so we had an impression that the interest will always go up after adjustable-rate period ends. However, there are different rules about how the mortgage rate is adjusted. One of such rules is add a fixed amount on top of the Federal Funds Rate, the interest rate we always hear that Alan Greenspan and Ben Bernanke have been changing. Now it is only 0.25%, it was 1.5% a year ago! I met a very happy home owner who has been hesitating to sell his home because his house is losing some value. When his adjustable-rate mortgage expires, he found out that his new rate is a little over 3%, much lower than the 5-year adjustable rate that expired! Bingo! He happily rent his house out for another year! Positive cash flow combined with a chance that the market will recover in another year, how fortunate! |
If we hear something we are not familar with over and over again, we tend to think that is a fact. Actually it is not, that is the power of advertising.