3.6% would be a very good rate for a 5-year fixed rate mortgage as of today (May 12, 2011).

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Any advice would be so appreciated. and what is a tracker mortgage and would that benefit me - coming off a two year fixed mortgage. my flat is in inverness area of scotland where prices do not appear to be falling, in my area they are even rising.

Hi again. You don't say what rate you are currently paying. I am in the same position - my fixed rate of 5.14% is going to end in December when I will go back on the standard variable rate. My advice to you is to sit and wait if you can afford to for a couple of months to see what the mortgage market does. The bank of england base rate has now moved for some time and although there are no guarantees, it is unlikely to go up as this would just cause more instability in the house market. I plan to wait to see what happens in the next six months. Yes, you will pay more on your mortgage for a short while but you can keep a close eye on rates to see what your lender can offer you (or another lender if you want to remortgage) and are ready to grab a good rate when it appears. Fixed rates are still relatively high and three years is an awful long time to be stuck with a higher rate. Remember that once the fixed the only way out of the mortgage is to pay the redemption penalty which are pretty hefty. If you are thinking of remortgaging to another lender then check the fees out - it can be expensive now and you need to calculate what you are saving in repayments over the fixed period to your upfront costs. Tracker rates are where you are given a discount from the Bank of England base rate (BBR). So for example, the lender may offer you a tracker rate of 1.25% + BBR - if the BBR was 5%, you would pay an interest rate of 6.25%. The downside to this is that if the BBR increases, so does the interest rate that you pay. If the BBR increased to 6% for example, you would then pay 7.25%. Personally, I prefer to fix for two years to stabilise your payments and help with budgeting. I hope this helps - I am now off for a cuppa and a ciggie as your questions today have worn me out! LOL

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I have a lot of equity in my home but would like some cash out. not sure if a good or bad idea.

If you have a lot of equity in your home just changing the terms of you mortgage won't pull it out. To do that you need to do a cash-out refinance, something that is very standard in the industry. I am actually in the mortgage industry and plan to never have more than 20% equity in my home. Every couple of years I have my place re-appraised and pull out "extra" money. This is then used for investments in other arenas. With mortgage rates so low (5.5-7.5% or so) there is no reason to keep cash wrapped up in your home. Why not take that cash out and invest it in other real estate or even stocks (a simple S&P fund will return 10%+ on a year-to-year avg basis)? When you borrow money at a low rate and invest it at a high rate you are using leverage to your advantage, and trully building wealth. Sorry to have gone off on a rant but I love what I do and like showing people how to build wealth using their equity. If you have any questions or anything feel free to write me an email, I'm always willing to talk shop. JO

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$246,000 on 30 year fixed mortgage at 7.8% fixed. i have 29 years to go. i have about $20,000. should i use it to pay the principal? i know this is not a good idea, but why? i will have lower loan balance, right? some say i can earn 5% out of $20,000 easily, but how? savings went down to 3% should i refinance? and what to expect? what is the best strategy? i have credit score 724

Don't put the 20k towards the mortgage. Your payment will stay the same and you will not have any savings, which is very important. What you need to do is refinance. 7.8% is TOO HIGH. You should be able to get around 5.5% (or lower) (30 year fixed). This would lower your payment around $450 a month. It SHOULD cost you around $1000-1500 to refinance. DO NOT TAKE POINTS. Another option is to take a 15 year mortgage. The payments would be about the same. Talk with a lender to run the numbers. Take the 450 a month and SAVE IT!!! Without fail.

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I have a mortgage for around 335,000 and i took a home equity line out for 35,000. i was thinking of doing a refinance and getting out of the adjustable arm i have and locking into a 30 year fixed. but then i was wondering. when i do this my payments will jump to around $2000 a month if not more, so why don’t i just pay the extra $600 a month now to the mortgage i already have and pay it down?

Do it now, because rates are going up.

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We are refinancing from a 3 yr. arm to a fixed mortgage. we are 60 yrs. old & will never live to see our mortgage paid off so we were thinking of going with a 40 or 50 yr. mortgage to reduce the monthly payment. we need to know if this is a good idea.

I would go for the 50 year mortgage. Here's my thought process- if you have extra, nothing is stopping you from paying more and taking down the principal faster- you can pay off a 50 year mortgage as fast as you like- the only thing that is locked in is the minimum you have to pay and , as uncertain as life can be, I would rather be locked into paying as little as possible in case I do run into financial problems. Wheter the mortgage is 15, 30 or 50 years- you can pay any of them off in 1, 5 or 10 years if you wish- heck you can pay the off the next day if you win the lottery! You need to look at the interest rates and the difference in the payments and your finances to determine what is best for you.

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I am thinking of refinancing so i can free up monthly cash flow to invest. i have been looking at a refi from www.madrate.com and they offer a $289 fee (includes credit, doc prep, processing, underwriting, tax service & flood certification fees) i have been reading various advisor recommendations to have a 30 year mortgage rather than a 10 or 15 so to free up investment cash flow. (www.ricedelman.com) rates are still pretty low right now and are very attractive. i know that when i pay mortgage interest, it is paid from my after tax income. it is also tax deductible at the end of the year. i also know that when i earn interest in the stock market, this is pretax interest. if i earn 8% in stocks, my effective rate earned will be lower since i need to pay taxes on it at the end of the year as well. i need some feedback if you think this would be a good idea or should i stay where i am at?

It depends on how long you have left on your 15 year mortgage. How much cash is it going "free up"? Mortgage advisers want a 30 year because they are earning more money in interest off you. What you have to do is see how much more you will be spending in interest with a 30 year vs a 15 year. .75% may not seem like that much but over time it really adds up and I bet you loose more money then would save or make in the stock market. It is a very risky move and I would just stay where you are. Are you still paying PMI and how much is it? If so how long until you can have the house reapreasied to see if you have 20% in the house? You can take the extra money from that and invest it. Also be very careful when looking at online refinance companies. 5.75 seems to good to be true for a 30 year fixed. 6-7% is the norm for a 30 year.

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I owe about 35k on my 2nd mortgage (15 years left) and my home equity is about 134.5k on my property.my 1st mortgage is fine,it's a 30 year fixed,at 5.875% and i don't wanna change that at all.i understand that a home equity line works like a credit card.i only wanna borrow as much as i need (in this case approx. 35k) and then pay it off.here's my question:do i need to pay the amount i borrow from my home equity line off right away (like an amex credit card) or can i pay it over time? i'm thinking about just to pay like a $1000 each month (out of the eloc) on my 2nd mortgage (right now i'm paying approx. $360.00 per month),because i'm afraid that the interest on the eloc can go up to max.18%,since it's variable (the offer right now is 5.39%).any suggestions anybody?

It looks like you are 'over-thinking ' this a bit. your possibilities are: a. refinance (the terms now are about 6%) and consolidate all that into your mortgage. b. ELOC (terms are also good 6 - 9%. but I would NEVER do a variable rate ELOC. that is a mistake, even in good times. Time and money are linear. paying off one type of loan at the expense of another isn't logical. Your Best Bet for the long term is to consolidate your 1st and 2nd into a 30 yr fixed at about 6% . Pay the points to get the rate down. And never let them tell you its just like a credit card.....cuz if you dont pay your credit cards....they dont take your house. I highly suggest using an excell spreadsheet to chart this out. You'll see that in the long term, you will pay a lot less. wer.

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Right now my fiance and i have a 30yr fixed rate mortgage at 6.5%. we have good but somewhat limited credit as we are young. unfortunately we are still paying pmi (only owned home for 14mos.) and our mortgage is strapping us down quite a bit, to the point we cannot see being able to have children for a very long time. are these loans something safe to go forward with? they are not fixed rate after the 5 or 7 years (i could go back to work by then). i feel we have a pretty good interest rate now.....any feedback?

Your rate isn't too bad, but that isn't really what concerns me about your question. You say that you are strapped for money. Did the Smart Choice option save you money on a monthly basis? If you feel that your payment is tough to handle, it would be best that you refinance before you miss any mortgage payments. You'll get better rates while your credit is in tip-top shape - if payments are late, it won't be. In the end, if you would prefer a fixed rate but still need more monthly cash flow, I'd recommend you ask your banker about the Smart30. The rate is fixed for 30 years and you have the option of making interest-only payments for the first 10 years. It's the best of both worlds - flexible yet secure. Let me know if you have any questions. Whether or not you refinance with us, we certainly hope it all works out for you!

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After weeks of political infighting, the senate approved a $300 billion plan friday that will help cash-strapped american homeowners facing foreclosure during what economists say is the worst housing decline since the depression. the measure would help an estimated 400,000 homeowners avert foreclosures by trading their subprime mortgages for 30-year, fixed rate mortgages. it would also overhaul regulation of fannie mae and freddie mac, the nation's largest mortgage finance firms, as well as send federal funds to states and local communities to purchase and renovate foreclosed properties. does this smack of government meddling in the private sector? do the home owners in question deserve a handout?...or is their unresponcible financing their own fault, and should they face the consiquences? your opinions please, and don't be a blooter! michelle h...you do have a heart! wow! a lot of interest in this from the folks, and some strong opinions as well. glad to see it, socialism hasn't gotten us yet! pythag...very astute observation...but lets get real...all those overhead costs for administering the loans! each homeowner helped will get more like 50-100k...the rest going to the beaurocrats doing all the real work!

I'll leave the bloviating for the pinheads, and their ilk. Here's the straight scoop: Far too many people approached home ownership like getting a mortgage was practically the same as getting a money-making machine. They figured that housing prices would keep rising, so getting into the housing market was nothing less than guaranteed income. Even though they could only afford it if everyone went perfectly, many people bought the absolute maximum house they could. They didn't buy the house they could really afford; they bought the one they figured would rise in value the fastest: namely, the more expensive ones. Now we are faced with a choice: either bail out these irresponsible people, or risk a huge financial crisis that could spiral out of control. Imagine how the people who were responsible enough to buy a more modest house must feel. No one is giving them support. They bought a house they can afford on their own. They made the prudent decision, but the irresponsible people are the ones getting the financial help. I'd like to say we should let these irresponsible buyers face the consequences, but the chance for huge economic troubles for the entire country make that an unwise move. We are figuratively being strong-armed into bailing these people out because of the magnitude of the problem.

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I have goood credit and i wanted to re finance, but i was told that it was not a good idea by citi bank, the people that have my mortgage, so what is the deal with this, i hear it is a good time, what is the real scoop, i want a fixed 20 year refinance mortgage, i owe about 85,000.

It is nearly impossible to refi in this market. I have stellar credit, low debt to income ratio, making good money, and I've been involved in my loan with BOA for over 3 months. It is unbelievable.