Good Advice from Suze
I'm not usually a big fan of Suze Orman. Maybe it's because I know she's right a lot of the time and I don't want to admit it since she grates on my nerves. But she had a good nugget in her Ten Tips for a Prosperous 2006 & Beyond.
6. Get UnARMed.
In some parts of the country, more than half the new mortgages taken out over the past few years are interest-only or adjustable rate mortgages (ARMs). These were attractive at the time, but mortgage rates are already nudging up. As I write this, they're above 6 percent.
That means if you have a 4 percent adjustable rate mortgage, you better get ready for a big hike. And no one expects rates to go down anytime soon, so don't feel smug even if your adjustment isn't until 2007.
If you have an ARM or interest-only mortgage and plan to stay in your home for a while, make it your primary financial priority to convert to a fixed-rate mortgage. If you plan to move in the near future, consider a hybrid mortgage with a fixed rate that mirrors how long you'll stay. For example, if you plan on moving in five years, consider a 5/1 hybrid, where the initial rate will not change for the first five years.
Lots of buyers in this area used ARM's with low rates in order to get themselves into homes during the recent boom. Now that ARM rates are rising and fixed loans are still fairly low, it might be worth checking into refinancing if you bought on an ARM. Before it ends up costing you and ARM and a leg.
::cues laugh track::
Hat tip: Nina @ Sitting Pretty <- Great personal finance blog
flickr photo credit solarider