Blown Mortgage

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You heard it right folks.  For those of you playing roulette trying to game the mortgage interest rate market in light of recent Fed activity let this be a good lesson.  The Fed cuts and mortgage interest rates go higher.  Don’t be fooled in to believing that the interest rates you pay on your mortgage are in lock-step with the Fed.  They aren’t, and if you try to game the system that way you’ll certainly miss out on opportunity.

From the Market Watch story covering the rising mortgage rates:

The 30-year fixed-rate mortgage averaged 5.68% during the week ending Jan. 31, up from last week’s 5.48%. The mortgage averaged 6.34% a year ago. The 15-year fixed-rate mortgage averaged 5.17%, up from 4.95%. The mortgage averaged 6.06% a year ago.

Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 5.32%, up from last week’s 5.13%. The ARM averaged 6.04% a year ago. And 1-year Treasury -indexed ARMs averaged 5.05%, up from 4.99%. The ARM averaged 5.54% a year ago.

To obtain the rates, the 30-year and 15-year fixed rate mortgage, along with the 5-year ARM, required payment of an average 0.4 point. The 1-year ARM required payment of an average 0.7 point. A point is 1% of the mortgage amount, charged as prepaid interest.

Graeme wrote an excellent post on the problems with gaming the mortgage interest rate market last week.  If you have a rate that puts you in a better financial situation take the opportunity to improve your loan; and ensure that the loan product you choose allows you flexibility to make additional changes.

This gives you the best of both worlds.  You get protection against rising rates with flexibility should rates start to fall again.

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