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December 5, 2011


by billthemortgageguy

As I have watched the “refinance boom” literally never leave since it began in 1998, I have now come to the conclusion that it was only inevitable that we were going to have issues with equity or lack there of.

The reason?  Everyone and anyone trying to lower their rate chose the 30 year fixed rate… The human mindset took over and tried rationalizing that “we all” were disciplined enough to put the extra savings towards the mortgage principal…Nope… Storage units became one of the most profitable industries and the square footage of homes doubling since 1985 proves that we lost touch of what it means to be disciplined to payoff our mortgages.. When I came into the industry in 1998 6.5% was the lowest rate for the 30 year and all those who had 7.5% or even 7% were refinancing.  We had a brief spike in rates in 1999 to 8.5%, but in 2000-2001 6.5% again..AND THEN 9/11….Things got crazy!  5.5%, 5.25%!  Through the years back and forth, back and forth..Banks were loving it!

AND NOW? Once again we are faced with the Lowest of all time.. What are you going to do?  Will you back to a 30 year fixed and pay more and more interest to the banks?  Sure the payment is lower, but go back to the beginning and think about the fact that you were making the 15 yr payment with a 30 year rate 7 years ago or even 10 years ago.. Many of the baby boomers are being forced to work longer because of their retirement accounts being depleted as well as that stupid mortgage staring them in the face..  I say this not to offend anyone but to educate and encourage those who may be thinking about lowering their interest rate or  even a buying.  If you can afford the 15 yr go for it.  You will thank me later. I promise!  Those who are taking the step into the 15 yr fixed are seeing their loan amounts dropping like crazy! Not only will it give you a better feeling psychologically, but will help with equity building in this declining market. A peace of mind if you are going to refinance later, cancel mortgage insurance, or sell..  Not to mention, not having a mortgage in retirement..

This past Thursday, I saw 3.5% come back into the picture!!  A great opportunity!  Call me if you have questions!  630-330-5626


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