I'm just wrapping up the purchase of my first home, and I am trying to decide between the various fixed rate terms they are offering. I'm looking at a 20 year amortization, and trying to decide on a term of between 4 and 10 years.
On one hand, there is the demographic based predictions that interest rates, etc., will stagnate when all the boomers shift into retirement mode. Then on the other hand, because of all the money printed over the last while, interest rates will spike fairly high sometime in the near future.
I can't really argue with either, but I am thinking of going long, say 10 years, which gives me a rate of about 5.25%. This protects me in the event of 15-20% rates coming back in the near future, but costs me more over the short term.
Going for 4 year term would get me a 3.79% rate, and save me a good chunk of cash, but only as long as rates don't skyrocket 4 years out.
Does anyone have advice, or is there anything I'm missing?