The Federal Reserve is on a mission to curb inflation. To do that, they have been raising short term interest rates. This in turn puts pressure on long term rates to go up…which they have. So how to combat this in a world where most homeowners have current interest rates in the 4% arena and a good share have less then 3%? Well lenders are coming up with programs to try and help get buyers into homes, and refinance prospects who need options other than getting rid of their wonderful current low rate, even if they need cash out. For buyers this could mean Two-One Buydown. This means you would start with an interest rate, two percentage points less than the current market rate for the first year of the loan. Year two would be one percent below the rate when you received the initial loan, and years 3 though 30 would be at whatever current rates was when you received the initial loan. The thinking is, while you receive payment relief the first couple of years, if rates go down, you could refinance into a lower rate for the total length of the new loan. For cash out refinance borrowers who don’t want to give up their current low rate but need some money now, Home Equity Lines of Credit (Heloc, usually adjustable rate) are becoming popular as well as straight second mortgages ( fixed rate term and must take all the money at one time). For explanation of these options, give Michael Mitchell a call at 530-406-2200, 707-259-1117 or 707-337-5970 cell!
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