David asks…
interest rates?
I’m getting a mortgage, and want fixed interest rate, but im not sure what term to go for. We originally said 3 years, but what are the chances of interest rates being lower than what they are now in three years time? Would we be better with a longer term?
Tony answers:
It depends on your situation. If your credit score is not that high right now then your best bet is a 2/28 or a 3/27. Then after the 2 years you can refinance your loan. If your score is really high right now and you’re planning to live in the home for a long time then you can also get a 30 yr fixed loan. Just remember that the longer you have the fixed rate then the higher your rate is going to be.
For example:
Your broker might offer you these options….
7% – 2/28 (2 yrs fixed & 28 adjustable)
7.25% – 3/27
7.50% – 5/25
8.25% – 30 yrs fixed
You’ll be paying less right now if you go for the 2/28 or 3/27. You have to ask yourself several questions to come up with the right answer.
1. What can I afford to pay right now?
2. How long am I going to live here?
3. Am I okay with refinancing in 2 or 3 years
If you’re not planning to stay in the home very long you can try an Interst only loan. I have a 5/25 IO on my home right now because I knew I wasn’t going to live here very long. Talk to your broker and ask him/her what he suggests. Their job is to get you the best loan possible that suits your needs.
Good Luck!
Betty asks…
Interest rates?
Im in the processes of buying a new vehicle ( i had to order it and it hasn’t arrived yet ) and im wondering what the interest rates are going to be on a $14,500 loan? My credit is really good, my credit score is like 761.
Tony answers:
You can look up current rates on bankrate.com. I provided a link. Current 60 month loan is around 6.94%.
Jenny asks…
Interest Rates?
Does the movement of interest rates (both increasing and decreasing) affect a firms profitability and how.
any elaborate and fully explained answers will be greatly appreciated.
Tony answers:
Generally the lower the interest rate, the higher the profit, because of the cost associated with borrowing. The higher the interest rate, the lower the profit. This is assuming the firm is borrowing money for its’ operations. If the firm isn’t borrowing money, it shouldn’t affect the firm. If the firm is borrowing money, an increase in the interest rate, means the firm has to pay more money to the lender in terms of interest charges than before, meaning there is less money for the firm. If the opposite is true, the firm is paying less money to the lender in terms of interest, so there is more money available to the firm. Expenses affect a firm’s profitability, as well as Revenues. Assuming revenues dont’ change in either scenario, an increase in the interest rate increase interest expense, while a decrease in the interest rate
has the opposite effect.
Nancy asks…
What is the interest rate for high credit scores and the differences in rates?
If one is prime rate. Credit score above 780. Are the final interest rates they quote you lower than what is advertise on their website? I am considering using a mortgage broker however their rates seem higher than the bank + the cost seems higher. If the rate is what they advertise, I might just go to the bank directly first and save my time. The mortgage broker seems to be on top of things and most likely have better info on closing etc. which is their only selling point but if the interest rate is higher than the competitor I am reluctant to go with it since they will hit my credit score if I apply. Simply put money is money a little .25% can equal 60K over the life of the loan. Something that could sit in investment generating returns for me.
In general what is the difference in the interest rate for prime/ A credit scores? Are the advertised rates using prime rates or just average rates?
Thanks in advance
Tony answers:
I work at a mortgage broker shop, and I believe that we can offer better rates to certain consumers then banks can. Sometimes they can offer better then we can. Also, watch the total closing costs as well. I know we get wholesale rates from lenders and offer these to the consumers and just add a small fee to it, but if you were to go to these lenders yourself they would offer you RETAIL rates. This is how my shop works we try to do as much volume as possible and work mostly off of referrals so we try to beat any deal out there, but different places go by different rules. The prime changes from day to day as well so keep that in mind when shopping.
Do not let a lot of people pull your credit cause it could hurt you if you have excessive pulls, maybe only like 5 people in a months time or so.
Good Luck!!!!
Michael asks…
What is the relationship between interest rates and demand for money?
A) As interest rates decrease, demand for money increases.
B) As interest rates increase, demand for money increases.
C) Interest rates are determined by demand for money.
D) Interest rates and demand for money are unrelated.
—
I am so confused. Is money supply the same thing as demand? In that case it would be B. But then again what if has nothing to do with it, then it would be D?
Tony answers:
A
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