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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: c.hinton who wrote (263026)	4/29/2008 3:40:17 PM
From: TimF	Read Replies (1) \| Respond to of 281500

Tim, it is the Federal Reserves argument .. I'm aware of that. all that "higher without high" sounds like goobly gook Perhaps I was overemphasizing accuracy at the expense of clarity. I do that sometimes. 95% accurate, but clear is normally better than 100% nailed down but confusing, but I sometimes do the later. When I do the later, I should probably break the ideas apart more, even if it makes a much longer post, rather than throwing all the ideas in to one paragraph. The distinction between "high" and "higher" isn't that complex. If interest rates where .5%, and than they moved to 2.5%, they would be higher, but not high. If they where 30% and than changed to 20% they would be high, but not higher. Its higher interest rates that cause payments after a refinance to increase, not high interest rates. 2.5% is low, but if your current mortgage was .5% you still would be reluctant to refinance. OTOH if rates moved from 30% to 20% you might want to save that 10% of interest by refinancing. (I know all these rates are unrealistic, but I'm taking extreme cases to make the points clearer.). The fed's statement accurately pointed out that that over time a fixed mortgage becomes lower in inflation adjusted terms, and most of the time as a percentage of the home owner's income. But this fact wouldn't do much to discourage refinancing. If you do refinance, and rates have not gone up, and your credit isn't worse, your new payments will also be lower in real terms, and likely as a percentage of your income, than they used to be earlier in the mortagage. If you get a new loan for the same length of time as the original loan, than the payments will be even lower than they where on the original loan, because you have a new longer period to pay the house back (of course if you go for a shorter loan, or take a huge amount of cash out this might not be the case).