Audio: Real Estate Minute: Long-Term Loan Interest Rates

Added September 27, 2005

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Summary: The Real Estate Minute with Ilyce Glink
As short-term rates rise, long-term loans might be your best bet
What’s the best deal on home loans these days? The answer might surprise you. I’m Ilyce Glink with your Real Estate Minute, brought to you by Kudzu.com.

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Audio Transcript: The Federal Reserve has raised short-term interest rates almost a dozen times over the past year. The Fed was hoping to contain any inflation that might be around, but raising the cost of borrowing money.

But something strange happened – long-term interest rates, which is the one 30-year mortgages are based on, continued to stay below or at 6 percent. In fact, long-term interest rates have stayed below 6 percent for much of this decade.

Which means it could be the right time to refinance into the home loan of your long-term dreams. If you’re one of the millions of people who took advantage of super-low short-term rates, and refinanced with an adjustable rate mortgage because it was so much less expensive than a 30-year loan, you might want to rethink that strategy now that it’s time to refinance.

The difference between a 5-year ARM and a 30-year mortgage is about 1 percent – that may not be enough of a difference considering the risk you’re taking. But of course it all hinges on how long you’ll be in that house.

Tune in tomorrow for another Real Estate Minute. And for more great tips, sign up for my free weekly newsletter at ThinkGlink.com. I’m Ilyce Glink.

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