Owning your own house (especially if you have a fixed-rate mortgage) is a good start.
When you borrow to invest, you must choose between an adjustable or a fixed-rate mortgage.
Interest on a fixed-rate mortgage would be 2% higher than his current deal, he says.
But buying inexpensive housing, with a low-cost, fixed-rate mortgage, offers a different balance of risks.
The average interest rate on a 30-year fixed-rate mortgage in the US is now just over 3.9%.
It would also reduce interest costs on their alternative--switching to a fixed-rate mortgage--provided they can still go that route.
For the week ending April 9, the MBA reported that the average contract rate on a 30-year fixed-rate mortgage was 5.17%.
Smart Money reports that the average rate on a 30-year fixed-rate mortgage dropped below 4% for the first time, to 3.94%.
They had planned to take on a fixed-rate mortgage but the rise now means their payments won't be as low as anticipated.
The 30-year fixed-rate mortgage averaged 3.91% for the week ended Thursday, down from 3.95% the previous week and 4.77% a year ago.
The 30-year fixed-rate mortgage averaged 3.95% for the week ended Thursday, up from 3.91% the previous week and below 4.86% a year ago.
Even the traditional 80%, 30-year, fixed-rate mortgage now has its skeptics.
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By comparison, the spread between 10-year Treasurys and a standard 30-year fixed-rate mortgage is just 1.93 percentage points, near historical averages, according to mortgage-data provider HSH Associates.
Someone with good credit and enough cash for a 20% down payment will spend more on interest for a 30-year fixed-rate mortgage in California than in Texas.
The firm noted the rate for a 30-year fixed-rate mortgage during the period matched its all-time low, making it the fifth straight week the rate has averaged below 4%.
Who's going to win the next roll of the dice--fixed-income savers praying for deflation, even if that means another Great Depression, or fixed-rate mortgage borrowers praying for a weak dollar?
Earlier this week, the Council of Mortgage Lenders said the main effect of FLS so far was to make fixed-rate mortgage deals, which account for about two-thirds of all new mortgage borrowing, a bit cheaper than before.
According Freddie Mac's weekly survey of mortgage rates, the rate for a 30-year fixed-rate mortgage has been at or below 4% for the past nine consecutive weeks and only twice in 2011 did it average above 5%.
Even if it never does, owning a home may still be a wealth building proposition for two reasons: you are locking in your housing costs with a fixed-rate mortgage while rents continue to rise, and your mortgage will be paid off at some point in the future.
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If we want to retain the long-term fixed-rate mortgage, it makes sense to recognize up front that there might be times when it is costly, do our best to develop fees to largely cover such potential costs, and try to put private sector entities in first loss positions before taxpayers bear any cost.
One drawback of a fixed-rate reverse mortgage is that you have to draw down the entire loan amount up front and pay interest on the entire amount across the life of the loan.
So far, the cuts in fees apply mainly to one type of reverse mortgage: the plain-vanilla fixed-rate "home-equity conversion mortgage, " which is backed by the Federal Housing Administration and is paid out to the borrower as a lump sum.
All this would be similar to a homeowner forsaking a 4.5% fixed-rate 30-year mortgage for a variable-rate mortgage of nearly 5%.
Mortgage rates have climbed--the average rate for a 30-year fixed mortgage was 6.33% last week, according to the Mortgage Bankers Association of America .
Hoffman expects the 15-year fixed rate mortgage to eventually drop to 2.75%, as well.
He says the spread between the 10-year Treasury note and the 30-year fixed rate mortgage has been unusually high.
In 1990, the average 30-year fixed rate mortgage was more than 10% but mortgage interest payments were only 4.3 percent of expenditures.
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By 2010, the average 30-year fixed rate mortgage fell to 4.69 percent, but the share of mortgage interest crept up to 6.3%.
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First, for people looking to get a traditional 30-year fixed rate mortgage, those rates aren't likely to move much in response to the Fed.
The Freddie Mac 30-Year fixed rate mortgage rose to 3.59% last week from 3.55% after setting a record low at 3.49% two weeks ago.
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