Prime Rate Credit

Well, in the already struggling home buying and home selling business, more bad news strikes, in the form of record ten months mortgage loan rate highs. That means the mortgage loan interest rates have gone up, to the detriment of both home buyers and home sellers alike, in an already struggling home market which has been plagued by too many houses for sale with not enough buyers on the market for the past two years or so. So how much did the mortgage rates go up?

Well, on paper, it doesn’t look that significant, but believe me, these few little decimals can add up big time if you buy a home, for the simple fact that most interest is charged up front and the second simple fact that you are paying on your mortgage loan for a very long period of time, comparatively speaking with other forms of credit lines, so the seemingly small difference can add up to thousands more dollars paid in interest over the life of the loan unfortunately.

That is, unless you’re independently wealthy and can afford to pay cash for a new home. But how many of us are in that lucky boat? Not many! And that’s not the worst of it either, analysts are forecasting that the mortgage rates may reach nearly 7% by the end of this year, which could really put a damper on things for prospective home buyers, not to mention the mortgage and home buying business as a whole.

I think my gosh, you know, we got a secondary loan to pay for just twenty five percent of our home, and that secondary loan is almost eight percent interest, and believe me, that is the first loan we are paying off, because the primary loan we got at nearly the prime rate going for home mortgage loans calculations at the time we purchased the home, so that loan will be paid normally, we won’t be trying to accelerate that one because it is at a lower interest. With a nearly seven percent “norm” it will be tough for people to rationalize buying a home when the rates are so high.

Also, what about people with ARM loans, won’t they be hurting when their mortgage skyrockets because the rates have increased? Just another reason why ARMS are not a good idea for most folks, unless you are in a unique position.