Hi Parma, She also said that the owner of a loan company told her that there's a law (and this is where it gets stupid) saying that you can go to your mortgage company and demand they lower your rate if you can show your home has lost a lot of its value. He said he did it with Countrywide, (our lender, also). He also said that they will try to do something else but if you stick to your guns, they have to lower it. Urban legend? Either urban legend, or a broker full of beans! *IF* your loan was sold to Freddie of Fannie, you *MAY* benefit from the upcoming Homeowner Affordability Modification Plan (HAMP) or Homeowner Affordability & Stability Plan (HASP - refinances.) More details here (go to my SECOND post inthis thread for good links); http://ths.gardenweb.com/forums/load/realestate/msg0314583220481.html?3 Homeowner Affordability and Stability Plan The industry is awaiting clarifying details from the Fed... due either April 1st, or (more likely) May 1st, at the earliest (depending on who's rumours are to be believed.) Anything already accomplished (i.e. with Countrywide or other lenders) was an open market Loan Modification negotiated prior to Obama beginning to tease us about the issuance of federal guidelines. Once the trickle-out of fed guidelines, pretty much most (or all?) of the servicing companies have frozen all negotiations while we wait for them to discover if they'll get more sugar by awaiting the government plans. Luck! Dave Donhoff Leverage Planner Here is a link that might be useful: Homeowner Affordability and Stability Plan

Hi krycek, You may be very well correct for people who don't save, typically overspend, and aren't very concerned or serious about their money. These are the folks who *NEED* to listen to the beginners messages by the likes of Suze Ormond & Dave Ramsey. Paying the more expensive premium for a 30 FRM is a good thing for the "minimum payment, set it & forget it" crowd. I always advise folks that; The SAFEST and FINANCIALLY SUREST strategy is to accumulate a Mortgage Freedom Account (safe, liquid, compounding growth funds) that you can CHOOSE to use to wipe out the entire mortgage balance all at once when you are ready. Earning a safe compounding return that outperforms the tax-deductible costs of mortgage leverage is not difficult *IF* you match timeframes (i.e. don't try to match the costs of 30 year leverage with 6 month or 12 month deposit commitments. Long term matches long term, etc.) Of course, once you have reached this point, you also have the power & discretion to safely "let the mortgage balance ride" with absolutely no risk (since you can stroke a check to wipe it out at will) while you continue to earn more in compounding growth than you pay in tax-deductible interest (not to mention the insurance premium savings you get when you have plenty of cash & can take larger deductibles.) A 5 yr ARM is going for 2.75% currently (no buydown points.) A 30 FRM is going for 3.875% currently (no buydown points.) That's a 40% cost PREMIUM for anyone taking a 30 FRM. If you did nothing but took the savings and applied it to principal (the least effective strategy... but still,) *AND the interest rate market went "limit up" (meaning it adjusted as high as legally allowed each year after the fixed period,) you would STILL pay less with the 5 yr ARM than the 30 FRM for at least 7-8 years. If the interest rate markets do *ANYTHING* milder than the absolute catastrophic worst... you save with the 5 yr ARM deeper, and longer... allowing you to apply that savings to debt elimination and safe, liquid savings the entire time. For *MOST* of my clients, I can design a plan that will allow them to retire all their debt (consumer *AND* mortgage) in 9-10 years, even if they are paying the premium on a 30 FRM. If we go with the 5 yr ARM savings instead, we can often retire all debts in 5-7 years. (OH... and that is WITHOUT reducing their lifestyle budgets... no distasteful "belt cinching" required, assuming responsible folks in the first place.) IMPORTANT NOTE: FannieMae bond data (in their SEC reports) whow that 19 out of every 20 mortgages are paid off due to refi or re-sale by just UNDER the 7th year. Since the 5 yr ARM (in a WORST CASE situation) is better for 7-8 years, THAT MEANS that 95% of the people who pay a premium for the 30 FRM are flushing that extra money down the toilet... all because of emotional fear, or lack of understanding. DISCLAIMER: although I do provide this for my clients... I also teach the principles in various posts & responses here for everyone, for free. Those who "get it" either apply it for themselves, or they contact me... and I love it just as much when folks tell me of their successes from reading my works as I do when they hire our firm. The better you understand the realities of money, interest rates, protective periods, protective caps, and the realities of the bonds markets (which tell us indisputably how frequently loans turn over,) the better you can get out of debt, and into financial freedom. Cheers, Dave Donhoff Leverage Planner

Mortgage rates are a lot more complicated than the Fed rate, they are going to move a bit but they should settle down pretty soon. Many people believe that home mortgage rates and even the prime rate are simply based on the Fed rate which is really not true. The Federal funds rate certainly influences the prime but not linearly. I am going to oversimplify this a lot but mortgages are a lot like any inventoriable product. You buy from a supplier at a set price and you sell to customers. Certainly the amount you have to pay sets a floor on the amount you charge but it doesn't set the price. Supply and demand sets the price. This gets more complicated by banks selling the mortgages, almost all banks are currently selling mortgages because they don't pay enough to keep. Banks are actually adversely affected by interest rate hikes also. They have 8 years of record low loans that are locked in, and the proceeds from those loans are used to pay depositors. That is essentially how banks work, they pay money to depositors and mark that up for loans. The interest rate spread is essential for making money. Alternately, they can sell the loans to a third party and get paid an origination fee. The kicker to this idea is that banks have to have loans. If the interest rate moves up enough that buyers decide not to pursue a loan (or buy a home) then the banks are screwed. The second kicker is - as loans start paying higher interest and stocks slow down (see bottom note) there is more demand for mortgages from businesses that buy mortgages. So competition for the better mortgage rates as an investment actually drives the rate down a bit. TL,DR: Typically, we see rates go up and then settle down a bit before they move up again. This needs to happen fairly slow or it creates a shock that grinds things to a halt. I believe you are safe for the next couple of years. Frankly, I would bet interest money will still be stupid low for the next 5 to 10 years, but the crystal ball gets a little cloudy at that distance. Note: I have seen half a dozen talking heads on the news giving reasons that the Fed is raising interest rates. I can't tell you whether they are just oversimplifying it for the public or they are really that bad, but they are mostly wrong. The Fed is currently very concerned about the PE ratios in the stock market. They are way too high and, actually, way above the danger zone. The Fed needs to slow the stock market down, they have needed to for a while but didn't do anything during the election to be safe. The market responded to Trump's election very differently than they thought and now they have to act. The primary reason for the rate hike is that they have to get investors out of the stock market and into the bond and debt market. There are other reasons, such as employment and the economy that have an impact but many of those are offset by artificially low international rates.

Yes, despite a lot of hoopla about bringing back manufacturing from both parties, and a lot of hot air and bragging from you know who, we haven't turned around much of the supply chain issues that are involved with concentrating production to even a few places around the US which then makes them vulnerable to all kinds of hold ups. I've always thought that monopoly, concentration of manufacturing capacity to a few places and shipping so many manufacturing facilities overseas was a bad, bad idea. Just because something makes a right now, in-your-face dollars profit does not make it a good long-term idea. We are now paying the price for these bad long term decisions. It takes a while to turn the Titanic around. I expect inflation and supply chain hold ups to continue, hopefully spurring a renaissance of American manufacturing.