[Claeren]

You can mitigate a lot of your risk by paying down even more of your mortgage than you are now.

Just to make up numbers, if you are paying $1600/month now but would have to pay $3000/month at 7% try to start paying $3000 now (the numbers are more drastic going from <2% up to 7% I realize). That extra ALL goes toward the principle and then if rates do hit 7%:

1) You are used to paying that much/month
2) in a worst case interest rate environment, you can refinance the remaining amount back over 25 years (or 35) again, likely cutting the per month burden considerably
3) and if they never go that high you are very comfortably set in a few short years
4) any percentage lower you pay now is worth a lot more to you than any percentage extra will hurt you later, even more so if you accelerate your payments (you are better off with 2% now and 6% later than 4% all the way through)




I think the rate outlook is still very foggy. Things should have deflated big time but they didn't, how the tension in the markets plays out is anyones guess but I still think it will be worse for average Americans than having just dealt with the recent collapse would have been. The whole Tea Party movement, healthcare debate and the pending pension crisis (which Canada is not even remotely facing) along with the total debt and unemployment in the States is starting to seriously destablize thing ' on main street'. How long until that hits Wall Street?

For Canadians that makes it even trickier. A falling USD and climbing loonie keeps inflation artificially lower which means rates may stay 1%-2% lower than otherwise? That could be the spread that hurts you if you took the 4%-5 year.




Claeren.