Variable closed just means that if you have the right to lock into a fixed rate at any point in the term, in your case five years...you do not pay any penalty, you just must lock in for a term that is equal or more than the remaining months on your closed variable term...example; you have 36 months left on the variable, you must take a fixed rate for a term of 36 months or more.

ON Canada - yes you still pay a penalty especially if you go to another lender. For a variable rate mortgage, normally it would be 3 months interest rate plus discharge/admin fee. You should be OK.

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I choose fixed rate 3.79% on four years. i can change my option to closing date, i can pick up the variable 2.85% closed on 5 years. can be this one one better option ?

Whenever possible, never ever pick an adjustable rate. Is either option a 'balloon payment"? If so, (to my understanding) this means that you pay interest only for the specified time and the full amount of the loan is due at the end of the term. With a fixed rate, you know exactly what your monthly payments will be. Also, try to get your taxes and insurance built into your mortgage. With an adjustable rate, the rates go up, your mortgage goes up. When the rates go down, your monthly payment tends to remain at the higher rate. If your realtor or mortgage broker is pushing for an adjustable rate for you, look into their motives for it. Are they really interested in your best interest (which is what they are being paid for) or do they just want the commission for selling the property? Just make damn sure that you can afford the mortgage payments no matter what the amount might be. Don't allow yourself to be wooed by the thought of owning your own home. Good Luck and much congrats on your new home.

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Firstly, i live in ontario canada, so this deals with the canadian banking system. my husband and i currently have a line of credit worth $25,000 at 4.55% interest. we have a closed mortgage worth $165,000 with a term of 5 years @ 5.3% interest and an ammortization period of 25 years (we are doing accelerated weekly payments, so our mortgage can be paid off sooner). our mortgage does not come up for renewal until june 2011. it is forecasted that interest rates are going to start climbing again, likely beginning this summer...they won't climb quickly, but will start to again. at this time, we are aggressively paying down our line of credit and we expect to have it down to $10,000 by the time our mortgage is up for renewal next year. we were talking to an account manager last night, and what they recommended was that we take our line of credit, put it on our mortgage, switch to a variable rate mortgage for 5 years (so our rate would go down to prime, which is currently at 2.25%), and take the additional penalty of about $5,000 for ending the term early on the closed mortgage. the way they explained it to us was that our mortgage payments would go up slightly, but we'd be paying off so much more interest, so the penalty would be worth it to take. if we took a closed variable rate mortgage for 5 years, we'd pay whatever bank of canada prime was. if we took an open variable rate, we'd pay prime + .70%, but could easily get out of the term if we wanted to with no penalty. we're not sure what to do. is it worth it to consolodate and put our line of credit on our mortgage + take the penalty? or should we just continue chisling away at the line of credit, wait until our mortgage is up for renewal and then take a variable rate mortgage (assuming prime is still pretty low). i hope i explained it all okay, thanks for the advice in advance.

If I understand correctly, you're about 4 years into a 30 year mortgage. Several points come to mind. The first is that the only way to make a good judgment is to take ALL the costs with switching mortgages, ie the penalty for closing the first mortgage as well as all the costs for the new mortgage, which will be in the range of 3-5K, make some guesses as far as interest rates and see how the costs compare. You don't say what your current mortgage could go to, ie +2% every 5 years, etc; this will have a bearing. If you do make a switch, why aren't you considering a 15 yr mortgage? Your payments go up by 15-20%, but you pay off the mortgage in half the time. In the same vein, while paying of your line of credit is good, your mortgage is at a higher rate, I would put most of the extra money toward it. Print out an amortization schedule and look at where you are on the mortgage and see how many months you can knock off the mortgage by prepaying on it. (Look at the principal column, so for every $ extra, it makes a big difference as at that point in your mortgage, for every $1K regular payment, $100-150 is going to principal. So if you dump in $1K extra, you just shortened the mortgage by 8-10 months.

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What does 1 years fixed 2.65% what does that mean? as the years go up that % is getting more why is that? does that mean prime is inculded. is this a term loan? 1 year fixed rate mortgage 2.650% 3 4 year fixed rate mortgage 3.990% 3 5 year fixed rate mortgage 4.090% 3 5 year fixed rate green mortgage 4.390% 3 5 year closed variable rate mortgage 2.150% 7 7 year fixed rate mortgage 4.950% 10 year fixed rate mortgage 5.200% 3

Without more context, this is hard to do - a lot will be guess work. Basically, you are seeing two types of mortgage here: ( xx year) fixed rate mortgage ( YY%) ( xx year) variable rate mortgage ( yy%) generally, as the term of your loan goes up ( longer years), the interest rate is higher. this is especially true with both our current economy, and speculation on where the future will go. Reasons: first, "they" ( bank , credit union, mortgage investor) are lending you money so that they can make a profit. Right now, CDs (certificate of deposit) and municipal bonds are low risk, and very low interest. If you check with banks - leaving your money with them in a CD for a longer time means you get a better interest rate. If I have a choice of investing in your mortgage, or with a bank - there needs to be some incentive. so, investing in a mortgage is a higher-priced thing than a regular savings bond or CD. And, like those things, the longer that investor's money is locked in, the higher the interest rate will be. second, there is always some risk involved. If I have a mortgage, and I always pay on time - have a great job, and a great credit rating.. there is still a chance that my house could get struck by lightning and burn to the ground with me inside. I might not have enough savings or insurance to pay back the mortgage. So, right away, a mortgage has more risk than a CD or savings bond, and even though the chances are very small - every day I have the loan open, there is an accumulating chance that something catastrophic may happen. Because there are a lot of liitle chances that something could go wrong, or I might miss a payment, again - the longer the loan means a higher interest rate. Nothing in the information you gave here indicates that these are Term loans or that any prime is included. Usually - Variable Rate mortgages are tied to some scale or prime.. maybe the Fed lending rate, or LIBOR, or some other indicator. That is usually in the notes or fine print about your particular mortgage. Basically, a 1 year Fixed rate mortgage means you pay everything in full within12 months, and the interest rate is fixed right up front. A 5 year fixed - means you pay in 60 months, and the interest rate is fixed - stays the same - for the entire term. (everything is plus interest which gets compounded.. and possibly 'points' which you don't mention.) A variable rate mortgage is something where you know what the starting interest rate is.. for " 5 Year Closed Variable Rate Mortgage 2.150%"; we know it starts at 2.150%. There are a lot of other things to figure here. - if the entire term is 5 years, or does this rate get fixed for the first 5 years of some longer term? .. then, how is the rate determined ( is it prime + some number?) , how often can the lender change the rate ( every month, every 6 months, once a year?) .. and is there a cap ( for instance, no more than 2% per year, and no more than 9% over the life of the loan) ?? I've seen mortgages presented in other ways.. when I see a 10/1/30 Variable mortgage.. I know that the initial rate is locked for 10 years. the total term is 30 years, and they can change the rate every 1 year after the first 10. Lenders usually present both a "Rate" and an "APR". The rate is what they are saying the interest is. The APR is what you are really paying, when you include other expenses, like 'points', mandatory insurance, and any other expenses in the contract. The 3's and 7s at the end of almost every line may be footnotes ( from a copy we can't see).. or they may be "points". In many mortgage arrangements, the lender will discount the interest rate if you pay a certain percentage of the loan off right up front. It is fairly common to see a 0.5% discount on your interest rate if you pay 3 points ( 3% of your entire loan) up front. Like I said - this is all speculation. These aren't regulated like an ingredients label on food. (yet) Mortgage lenders and brokers can say a lot of misleading things in advertisements. Even when we think we understand what's going on - the only 'real' promise is the long, legalese-laced contract that is signed upon the closing. Make sure you have a good lawyer represent you in ANY mortgage transaction.

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Can you please help me find a good independent variable for my multiple regression model? i need at least 3. i can't think of any for my econometrics class. my variables are month, year, closing price, cd rate, unemployment rate, interest rate, treasury bill rate. i want to do regression analysis such qd and qs equation of these variabes

I would use a stock index such as the DJIA or the S&P 500 as the independent variable.

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I am in canada. i have about 3 years left on a 5 year closed mortgage with a variable rate that is the bank's prime minus 0.8%, and i can convert to a locked in rate with no penalties. their prime is 4.75, and the posted fixed rate is 6.09 so my rate would go up by 2.14%. i may be able to get slightly better than the posted rate, but not by much. how much do you think mortgage rates are going to go up? should i lock in now or gamble on the variable rate? please explain your reasoning. the fixed rate is 5.79% if i lock in for 5 years. i am not planning on selling in the next 2 years. (i suspect the market is on the verge of a downward trend, or even collapse, so it's sell now or hang on for the ride!)

I don't live in Canada, but by staying in the variable rate you are putting a time limit on your gamble. You are gambling that in 3 years the interest rates will go down...which is possible but not likely to see a signifigant change. The current status of the economy makes me believe that the interest rates are at there lowest, or very near. This decision will be based on what your future plans are. If you are thinking that you will sell the house within the next three years, then keep the variable, sell the house, and move on. But, if you are thinking that you will live in this house for many more years, then you are better off to get the fixed rate. There is less of a gamble with a fixed rate, and 6 points is very very good. Lets hope for the best and the economy makes an upward turn, it is likely that the rates will not hit these lows for a very long time. And if that happens, you will see a rate that is in the 7-7.5 range in that three years for a fixed rate. So, you will save money in the long run if you plan on living there for a long time, lose money if you plan on selling in the short term.

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Kim and dan bergholt are both government workers. they are considering purchasing a home in the washington d.c. area for about $280,000. they estimate monthly expenses for utilities at $220, maintenance at $100, property taxes at $380, and home insurance payments at $50. their only debt consists of car loans requiring a monthly payment of $350. kim's gross income is $55,000/year and dan's is $38,000/year. they have saved about $60,000 in a money market fund on which they earned $5,840 last year. they plan to use most of this for a 20% down payment and closing costs. a lender is offering 30-year variable rate loans with an initial interest rate of 8% given a 20% down payment and closing costs equal to $1,000 plus 3 points. before making a purchase offer and applying for this loan, they would like to have some idea whether they might qualify.

Thank you for setting out the parameters so well here. There are a few things that I would need to know to know if a better option is available to them. Given what you've put here, the family you're talking about should be able to see a better loan (fixed rate for example) and lower loan costs (fewer points to pay) from most lenders or brokers. A lot depends on their credit histories. Since they only have 1 item of debt, one concern would be if they have enough trade lines (sources of credit available to them right now) to qualify. Most lenders require 3. If they have open credit cards that carry no balance, that works great. If all things that aren't mentioned here are as well planned as the items you have listed, they should qualify quite easily and for better terms.

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I'm taking a personal finance class right now and i understand everything for the most part... if a lender is offering 30-year variable rate loans with an initial interest rate of 8% given a 20% down payment and closing costs equal to $1,000 plus 3 points. my question is... what does the "3 points" mean? any help is greatly appreciated! thank you all so much!!! i think ill be able to figure it out!

3 percent of the loan amount. This loan sucks.

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Kim and brgholt are both government workers. they are considering puchasin a home in ;the washinton d.c. area for about $280,000. they estimate monthly expenses for utilities at $220, maintenance at $100, property taxes at $380, and home insurance payments at $50. their only debt consists of car loans requiring a monthly payment of $350. kim's gross income is $55,000/years and dan's is $38,000/year. they have saved about $60,000 in a money market fund on which they earned $5,840 last year. they plan to use ;most of this for a 20% down payment and closing costs. a lender is offering 30 years variable rate loans with an initial interest rate of 8% given a 20% down payment and closing costs equal to $1,000 plus 3 points. before making a purchase offer and applying for this loan, they would like to have some idea whether they might qualify.

What's their credit score? If their credit score is good enough, they should be able to get a better deal on a loan than what they've been offered. They should shop around.