“Risk Without Return”

Just two weeks after I last noted plunging interest rates (see, “Refinance Redux, or, “Thanks, Greece!”) . . . they’ve dropped even further.

This time, the catalyst is Spain (can you spell C-O-N-T-A-G-I-O-N?)

While home Buyers may not follow gyrations in world debt markets, if you’re looking for a home — or have a mortgage on one you already own — you should take note:  the 10 year U.S. bond is a popular peg for fixed interest rates (“LIBOR,” or the London Interbank Offer Rate, is the analogous one for variable rate mortgages).

The bottom line:  if you’re tired of getting whacked as a saver, switch sides and take advantage of record-low rates to reduce your expenses.

Just don’t get so overextended that you can’t handle the payments.

P.S.:  One more piece of advice:  inquire about a re-lock option from your lender.

When rates are as volatile as they are now, a second “bite at the (interest rate) apple” can be worth the fee (typically, a fraction of a point of the loan amount).

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

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