Will Interest Rates Rise?

At some point they will and I have to agree with this article that it will happen rapidly.  We probably still have some time until that happens but this is just one reason to avoid taking out an Adjustable Rate Mortgage (ARM).  Yes, they can be much more attractive than a Fixed Rate but rates are at all time lows and we don’t know what the future holds for us.  If we did, we wouldn’t be in this current housing crisis.

When it comes to a Jumbo Mortgage, loan amounts above $417,000, I can understand someone looking an ARM just due to the rates on 30 year fixed Jumbo loans but I still want my clients to really consider a Fixed Rate loan.  Say for example a 30 year fixed rate Jumbo mortgage is at 6.5%.  Yes, that is high compared to market rates but it is still low historically. 

A rebuttal would be “well, I will just sell the property before it adjusts.”  That may be one route but isn’t that the same thing that also got us into this mess?  It sure is.  We have no idea what the future of this real estate market is so do as they did in the past, be conservative. 

Sometimes we get too spoiled and at the same time greedy.  Rates will rise there is no question.  You don’t want to get stuck in 3, 5, or 7 years from now saying, shoot that Fixed rate loan was the better option.