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April 18, 2008
fixed vs. variable
I currently have a second mortgage that has a fixed rate of 8% interest. I will have this paid off in 7 or 8 years. My bank has a special right now that we can switch to. We will have a fixed rate of 1.9% for 5 months. Then it will go to a variable prime rate which is 5.25 at this time, but who knows what it will be later. If we switch and the rate stays below the 8% we are paying now it will be paid off in 4 years. I am usually consrevative in nature, but this might be worth the chance. What do you think the rate will do in the next 4 or 5 years?
Confused
Comments
what about plan c -- refinance the second mortgage to a lower fixed rate? it wouldn't be 5.25%, but it might be lower than 8% and would give you more security.
Posted by: z at April 18, 2008 8:13 AM
Unless you can predict where interest rates go don't do it. Run the numbers to see if it makes any sense to refinance to a fixed rate that will benefit you WITHIN THE 7-8 YEARS THAT YOU EXPECT TO PAY IT OFF.
Are you sure there isn't some premium over prime that the ARM will reprice to?
Less risk...what are the ARM rate being offered for a 3-YR ARM and a 5-YR ARM?
Posted by: daveinbedstuy at April 18, 2008 10:23 AM
1.9% what bank is this?
Posted by: guest at May 1, 2008 11:56 PM
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