Community Chat

[SilleeMee]

Rising interest rates are a good thing for homeowners, myself being one. I recently inquired about a reverse mortgage and it was not looking good. So I will wait and see what happens to rates in the near future. Hopefully they will keep rising.

[151949]

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@shoekitty wrote:

That is still darn low.  When i bought this house in 1987 the lowest adjustable rate was 7.90. Everyone raved how we got the best rate.  By 1993 the rates were 11 and 12%

I am old enough to remember the 17 and 18% rates in the late 1970's and early 1980's.  Homes sat on the market for 2 or 3 years.

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When we bought our house in Pa in 1983 the interest rates were 18% - we paid points to bring it down to 15% and about 5 years later we were able to refinance to 9% and for the same monthly payment lower our mortgage from 20 years to 15.However - that refinance cost us $3000 cash for closing costs.We quickly realized the value of getting that mortgage paid off ASAP and started paying extra each month on the principle and got it paid off sooner. However, our finance person  explained to us back then that usually when interest rates are low the cost of a home goes higher and when intertest rates are high the cost will be lower. Our interest rate was very high but we only paid $62,200 for our home. When we sold that house in 2010 interet rates were almost nothing and it sold for $175,000. Interest rates have stayed very low and the prices of homes have gone up considerably - we know a couple who sold a villa they only owned one year and made a $80,000 profit on it. So hopefully, by raising interest they can put the brakes on inflation.Anyone who has made a large purchase like a house or a car recently can tell you the prices are very high and climbing daily.The only way the government has to control inflation is thru interest rates.

[queendiva]

I was fortunate to refi my mortgage a few months ago at 3.5%. Saving over $260.00/month from my previous low morgage is very helpfull. I have already recouped the cost of the refi.

[handygal2]

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@Goldengate8361 wrote:

Interest rates going up will actually help many people as they start to earn more money on CDs and other savings.

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@Goldengate8361: Funny how the mortgage interest rates suddenly went up overnight by a full percent. But how long will it take for the savers to get 1% higher??!!

[ballyk]

The Fed is expected to raise interest rates 3x next year so mortgage rates etc will continue to rise. Interest rates on savings etc will increase incrementally, they are separate from what the Fed does.

[shoekitty]

You are so right!  Omg, i told the teller last month, pretty soon i will have to pay the bank interest!

can you imagine the bank using 100,000 of a person's moneyfor one year, and thanking them with 12.99 in interest.  No wonder people dont save more.

[shoekitty]

However, i do see the down side of interest hikes on the mortgage industry.  That arm stretches its hand out far and wide. When rates go up, it is harder to qualify  as you can afford less home at the payment rates you qualify for. It pushes a certain sector out of the market, others buy less home, and buy older homes.  The new building slows down a bit, then construction suffers, so on and so on.

i believe what goes up, comes down.  It is the cycle of life. And sometimes wht goes up, keeps going up, lol. Like food