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Old 07-31-2008, 01:16 PM
 
3,583 posts, read 10,239,620 times
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Quote:
Originally Posted by rcarrillo View Post
You keep saying that 6.95% is "over prime". Mortgage rates have NOTHING to do with the prime rate. Credit cards, auto loans and other short term debts are tied to mortgage rates. In 2006, the prime rate was in the high 7- mid 8% range. Today it is at 5%, yet mortgage rates are HIGHER now than they were in 2006. I dont know when you got your loan, but from late 2005 until the start of 2008 prime has been >7%.

I just do not want anyone reading this to start associating the "prime rate" with the "mortgage rate" as is often done.
Rcarrillo, you have offered many very sound advise on this board but on this one i believe you are incorrect. Prime is one of the indexes that ARMs can be based on. So is LIBOR, T-Bills MTA, CMT and about 4 others. It all depends on the index used, and it very well could be Prime.
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Old 07-31-2008, 01:28 PM
 
Location: Pennsylvania, USA
5,217 posts, read 4,111,192 times
Reputation: 908
Quote:
Originally Posted by Va-Cat View Post
Rcarrillo, you have offered many very sound advise on this board but on this one i believe you are incorrect. Prime is one of the indexes that ARMs can be based on. So is LIBOR, T-Bills MTA, CMT and about 4 others. It all depends on the index used, and it very well could be Prime.

He didn't get that I was taling about "prme" as those that had great credit, etc. got the better or "prime" rates.. so when I say above prime i mean that it was above the rates that were offered to the buyers with the best credit, etc.
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Old 07-31-2008, 01:29 PM
 
Location: Pennsylvania, USA
5,217 posts, read 4,111,192 times
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Quote:
Originally Posted by rcarrillo View Post
I do not want to argue... but 6.95% is a low rate. If you look back, even as recently as 2003 that was a super-low rate. When I bought in 2000, I had 750+ credit, solid W2 income, down payment, assets, rental history... everything. My great "low rate".... 8.5% fixed.

Even today, I can get someone with those qualifications a <6.5% fixed rate with 0 points. Some people look at me like I am nuts even with that, and want to know what happened to the <6% rate they "deserve". People got used to cheap mortgage money with little qualifications and now they do not want to adjust to the reality.

You keep saying that 6.95% is "over prime". Mortgage rates have NOTHING to do with the prime rate. Credit cards, auto loans and other short term debts are tied to mortgage rates. In 2006, the prime rate was in the high 7- mid 8% range. Today it is at 5%, yet mortgage rates are HIGHER now than they were in 2006. I dont know when you got your loan, but from late 2005 until the start of 2008 prime has been >7%.

So the 6.95% rate was "lower" than the fixed rate you might have been able to get at the time, and in historical terms it was "low". Again I do not want to argue with you and I agree and disagree with many of your points.... I just do not want anyone reading this to start associating the "prime rate" with the "mortgage rate" as is often done.
When I got my mortgage the "prime rate".. meaning the BEST RATE you could get was in the low to mid 5's.. maybe even the high 5's.. THAT is what I consider and what many have tossed around as the "prime" interest rate.
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Old 07-31-2008, 01:30 PM
 
Location: Charlotte, North Carolina
5,137 posts, read 15,093,116 times
Reputation: 1007
Prime rate is for 2nd mortgages, HELOCs, student loans, credit cards, auto loans, etc.

LIBOR, COFI, CMT are the indexes for ARMs.

Rcarrillo is correct

Quote:
Originally Posted by Va-Cat View Post
Rcarrillo, you have offered many very sound advise on this board but on this one i believe you are incorrect. Prime is one of the indexes that ARMs can be based on. So is LIBOR, T-Bills MTA, CMT and about 4 others. It all depends on the index used, and it very well could be Prime.
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Old 07-31-2008, 01:38 PM
 
Location: Pennsylvania, USA
5,217 posts, read 4,111,192 times
Reputation: 908
Quote:
Originally Posted by renriq02 View Post
Prime rate is for 2nd mortgages, HELOCs, student loans, credit cards, auto loans, etc.

LIBOR, COFI, CMT are the indexes for ARMs.

Rcarrillo is correct

the best rate you could have gotten when I recieved my mortgage was in te low to mid 5's.. 6.95% was on the higher end.. THAT was what I meant by prime.. if you were a "prime" buyer you got the best rate.. and 6.95% was definately higher than the best.
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Old 07-31-2008, 03:53 PM
 
Location: Cary, NC
1,036 posts, read 3,627,137 times
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Glad that was cleared up... because I was confused by what she meant. I know that many people then call me talking about "the federal reserve lowered rates" and wanting to know why our mortgage rates did not go down. I don't want people thinking mortgages are tied to the prime rate. As VA-Cat and renriq mentioned there are HELOCs and some variable second mortgage rates that might use the "prime rate" as an index... but that is a different matter.


Again, it speaks to the serious need for financial education in our schools. My degree is in biochemsitry/molecular biology and in genetics. I love the sciences and think it is important for every child to learn the basics of science, history, literature, art, etc. i think everyone needs to understand these things and it makes us a little more well-rounded.

But come on.... how can we seriously not have 1 course requirement for financial literacy??? It should be spread out, incorporate it into other subjects. Learn the history of economic theory, math with balancing checkbooks and calculating interest payments... the basics.

Then when you get into junior high or high school have at least a little bit summarizing credit cards, investing, saving... how mortgages, credit scores, savings account and social security work. How many students go to college and sign up for the credit cards that are "university sponsored" with the team logo and a free t-shirt knowing nothing about how it will affect their future?

Buyers need to beware, but seriously.... the government wants to meddle in what programs lenders can offer but won't make financial literacy a part of public education?
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Old 07-31-2008, 07:24 PM
 
Location: Pennsylvania, USA
5,217 posts, read 4,111,192 times
Reputation: 908
Quote:
Originally Posted by rcarrillo View Post
Glad that was cleared up... because I was confused by what she meant. I know that many people then call me talking about "the federal reserve lowered rates" and wanting to know why our mortgage rates did not go down. I don't want people thinking mortgages are tied to the prime rate. As VA-Cat and renriq mentioned there are HELOCs and some variable second mortgage rates that might use the "prime rate" as an index... but that is a different matter.


Again, it speaks to the serious need for financial education in our schools. My degree is in biochemsitry/molecular biology and in genetics. I love the sciences and think it is important for every child to learn the basics of science, history, literature, art, etc. i think everyone needs to understand these things and it makes us a little more well-rounded.

But come on.... how can we seriously not have 1 course requirement for financial literacy??? It should be spread out, incorporate it into other subjects. Learn the history of economic theory, math with balancing checkbooks and calculating interest payments... the basics.

Then when you get into junior high or high school have at least a little bit summarizing credit cards, investing, saving... how mortgages, credit scores, savings account and social security work. How many students go to college and sign up for the credit cards that are "university sponsored" with the team logo and a free t-shirt knowing nothing about how it will affect their future?

Buyers need to beware, but seriously.... the government wants to meddle in what programs lenders can offer but won't make financial literacy a part of public education?

I just had a discussion with my friend onthe subject and we both agreed that there were thigns we just didn't learn in H.S. We also didn't neccesarily learn it at home too because our parents were of the generation that you didn't ask what your parents make, you didn't discuss money ro finances.

I , on the other hand, will be open to all of it for my kid so that he learns adn doesn't make the same financial mistakes I've made.
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