Quote:
Originally Posted by Rerun
Why do you think that? Do you think it would be a big mistake to wait a year before locking into a 5 yr fixed rate?
Currently the five year rate is approx. 0.69 to 0.99% higher than the best 1 year fixed rate.
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The time to get a 1 year rate is when you think rates are going down. Well, the rates
definitely won't go down, so you are making an iffy bet on them staying the same or only very slightly increasing. By taking a 5 year mortgage, you are getting the best rates in history and are guaranteed a win - why jeopardize that for the sake of 1 year of slightly smaller payments?
You should be looking at the worst case scenario and comparing it to the best case. In this instance, worst is that rates go up up and up, and you end up paying several percentage points over what you could get now. In the best case, you get the same deal. Even if you weight the cases so that the worst case is very unlikely, I don't see how the marginal return of 1 year's lower payments makes going that route the better decision.
Unless it's froth money (ie - money you can do without or that you've set aside specifically to gamble with), always bet on the sure thing.