Sunday, March 09, 2008

Thoughts About Our Mortgage

When we purchased our current home about 18-months ago, we were thrilled to get our mortgage at 6.5% interest. We've been noticing that the interest rates have been fluctuating a lot recently, and we've silently been hoping for a major drop in the interest rates. It hasn't happened yet.

Our initial plan, provided that the interest rates do drop, was to lower our mortgage payment. We're thinking now, that a cash-out option might be a good idea because we would really like to finish a portion (if not all) of our basement.

I was recently talking to a friend who deals with Mortgages on a daily basis, and she suggested that we consider getting a 15-year fixed loan. This was before we were considering the cash-out option. She thought she would be able to get us a 4.5% interest rate. It was very tempting. Unfortunately, while a 15-year mortgage would be wonderful, the monthly payment is about $280 more than we can afford a month. Not a good choice.

Ideally, the interest rates will take a dive (come on 4.5%!), and we will be able to do another FHA-Streamline Refinance, and possibly even get some cash-out so that we can finish our basement. If not, the lower interest rate would be REALLY nice.

The nice thing about mortgages is that there are a lot of choices available. Of course, your financial situation may severely limit you in your choices, but the choices ARE there.

What kind of mortgage is right for you?


Blogger Lara said...

I was listening to a mortgage radio show the other day and he was saying that people are expecting mortgage interest rates to go down because the federal reserve keeps lowing the interest rates. But then I learned that those two interest rates are independent of one another, and usually if the federal interest rate is lowered it has a negative impact on mortgages and they tend to go up and not down. Which made me kind of sad...I'm afraid Joel and I are never going to be able to buy a house!

9:21 AM  

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