The fixation on the monthly cost is a danger that could move us to a society where the individual practically don’t own anything in terms of equity but are instead leasing with interest payments. This is great for the lending industry but pretty sad for the individuals.

For the majority of Americans, this should be past tense.

I think you are missing the point. All Rhonda (and most disciplined investors / buyers) are suggesting is that choosing 30-yrs and resetting the term is potentially costly but that is only if you are not disciplined in “paying down” the principal.

30-year allows flexibility in times of distress, job loss, etc, etc, etc….

However, your point is taken in that may non-savvy people are extending their terms and hence paying more interest, so the wise thing to do if you can handle the higher payment is to actually force yourself into a shorter term than the # of years you previously had remaining.

Could you sell a service to people not using you for escrow where you give your opinion on a loan package?

You mean something like this: FeeDisclosure.com analyzes mortgage fees?

“refinancing a 30y fixed mortgage you are resetting your loan term to another 30y. So if you for example have paid for 10y at 7% you have 20y left. By refinancing to say 5% you will get a lower rate but you add 10y of payments including interest to the bank. In this scenario it’s probably better to refinance for a 15y fixed period to use the low rate advantage to shorten your payment period and the total cost of the loan. ”

This totally depends on what the home owners plans are. If they’re not planning on retiring at the home, they may be better off with the refi. They can invest the savings of the new mortgage payment or apply the difference of the payment towards the principal of the new 30 year to whittle the balance down quicker.

I do like 30 year over a 15 only because you can effectively create a 15 year amortized mortgage by paying the difference in payment towards principal if this is what suits your financial goals. And if you run into a time when you cannot afford a 15 year payment, you can just make the 30. I like flexibility with ones monthly cash flow.

Since we’re talking refi’s, consumers should check out “no cost” refi’s (the cost are rolled into the rate) to compare with a refi w/closing costs.

20 year amortized mortgages are also available (not the same reduction in rate as the 15 or 10).

Nice post, Tim. I feel for ya!

When I was in escrow, I hated seeing high interest rate loans…and it was common for borrowers AT SIGNING (so late in the process) to ask “how does my rate look”? Dude!

My sense is that NAR is trying to influence anything to kick start the hurting markets and stave off further price declines.

Alan- not while I’m a stake holder in an escrow co. I’m not trying to be Robin Hood here and I’m not opposed to the retail relationship between loan officers and the public. I’m just opposed to the BS talk and special interests in the industry and then see the opposite occur on Settlement Statements. It certainly isn’t everyone.

In other words, I give ZERO credence to what people say they do for their clients, I just watch what they do. That’s all the talking I need. Talk isn’t cheap in this industry, it can be very expensive to those that don’t educate themselves.

5% isn’t that far away…

Will it help stabilize the >417K market as the NAR claims ?