Time to get a mortgage or car
Posted by Don on June 3, 2009
Debt is an ugly word in my home, but there are some types of good credit. The really only type of good debt is a mortgage. Now we have all heard about the horrible mortgages made in the last two years, but if you have a mortgage that is over 6.5% (yes there are still some of us out there) then you need to try and refinance in the very near future or if you are in the market for a new home then this is the time to get some financing and make an offer.
According to Bankrate.com 30-Yr mortgage rates have gone from 5.0% last week to 5.3% this week. Given the sharp rise in market rates over the last two weeks I think we are due for small pullback in interest rates, so you should use this opportunity to try and get a mortgage if you are in the market. The US is not going to stop printing money and issuing debt, and that is going to cost us all more over the next two years in the form of higher interest rates.
Now is also a good time to get a car if you need to. With the bankruptcies of Chrysler and GM you can get a decent deal (the need to clear inventory, but they are not going to give them away) and get about $5,000 off of a new car (including the 10% you should pull off the sticker) or GM is offering 0% financing on most of their 2009’s.
Also use this time if you can to tighten your belt and pay off any credit card with a variable rate. This is also a good time to apply for a card with a lower introductory rate, because with the new credit card bill banks and card companies are raising the rates on their customers with new terms.
The Federal Reserve is going to try and keep rates low, but they can’t hold them back forever. Today Ben Bernanke , told Congress to worry about fiscal sustainability. Now I agree with this, but it seems funny that the guy out there printing all the money is now worried about fiscal sustainability. He also talked about the rate of growth remaining below it’s long term potential. These statements in my opinion were to put the market on the defensive and try and talk down the 10 year rate a little bit to get rates to drop and also to try and reduce some of the loss they have taken over the last two weeks on the treasuries the Fed purchased.
