Mortage rate update from Mark Robertson with First Capital
24th February 2006
Do You Have a Second Mortgage and Equity? Prime Just Went up to 7.25%
Alan Greenspan decided to raise rates just one more time at his last meeting as “Chief of the Federal Reserve.†What does this mean for you? Well if you have a second mortgage, it probably means your payments just went up again. In December of 2003 the Prime Rate was a low 4%, making Home Equity Lines of Credit very attractive, since these loans are tied to the Prime Rate. Since then, the Prime Rate has increased more than 10 times to make it a whopping 7.25%. Those who have held their home equity lines since then have seen their payments almost double. The good news is that long term rates are still very low, and equity growth in homes has been steady. The unsettling news is that rumors of a market cool-off, growing housing inventory, and longer listing times on homes could begin to slow down the tremendous amounts of equity growth that Southern California homeowner’s have experienced over the past two years.
These two factors are strong indicators that it may be time to bed down into a longer term loan for the next 3 - 5 years, and get out of any second mortgages that could continue to climb. We are encouraging those that have seconds with a good equity position, those who are coming to the end of a 3 or 5 year term, or those in a monthly adjustable mortgage, to refinance into one new loan for a 7 - 10 year term. New home buyers should seriously consider a fixed rate second, rather than equity lines which are tied to Prime, and can go up. For a free analysis of your current home situation with absolutely no obligation ever, call me or anyone on my team Todd Pianin 858-259-6070.
search the San Diego MLS or visit our website to view our featured listings!Julien Brandt: 858-342-2773