“Fed Chief Questions Loan Choices.

Greenspan says certainty of fixed-rate

mortgages may not be worth cost. In a rare

evaluation of the interest rate options that

households face, Federal Reserve

Chairman Alan Greenspan questioned

whether American homeowners are well-

served by popular fixed-rate mortgages.”

Leveraging Home Equity to Create Wealth, Steven Marshall. Copyright © 2004 Steven Marshall. Published by Steven Marshall, Bellevue Mutual Mortgage, Bellevue WA.”

Libor Graph

Leveraging Home Equity to Create Wealth, Steven Marshall. Copyright © 2004 Steven Marshall. Published by Steven Marshall, Bellevue Mutual Mortgage, Bellevue WA.”

The History of US Interest Rates

Leveraging Home Equity to Create Wealth, Steven Marshall. Copyright © 2004 Steven Marshall. Published by Steven Marshall, Bellevue Mutual Mortgage, Bellevue WA.”

30 Year Fixed vs. Cash Flow ARM

MortgageBalance

30 Yr Fixed 6.25%

Cash Flow 3.25%

Monthly Savings

$300,000 $1847 $813 $1034

$400,000 $2463 $1083 $1380

$500,000 $3078 $1354 $1724

$1,000,000 $6157 $2708 $3449

$1,500,000 $9235 $4063 $5172

Leveraging Home Equity to Create Wealth, Steven Marshall. Copyright © 2004 Steven Marshall. Published by Steven Marshall, Bellevue Mutual Mortgage, Bellevue WA.”

Cash Flow ARM Effective Payment

MortgageBalance

Cash Flow 3.25%

Tax Savings 35% Bracket

Effective Payment

$300,000 $813 $285 $528

$400,000 $1083 $379 $704

$500,000 $1354 $474 $880

$1,000,000 $2708 $948 $1760

$1,500,000 $4063 $1422 $2641

Leveraging Home Equity to Create Wealth, Steven Marshall. Copyright © 2004 Steven Marshall. Published by Steven Marshall, Bellevue Mutual Mortgage, Bellevue WA.”

Why Does The Fed Lower Or Raise Rates? The Fed is trying to maintain a “healthy” economy. If the

economy is “very slow” the Fed might decide to lower interest rates that will in turn make money available to businesses, home buyers and consumers.

If the economy is “heating up” and in the opinion of the Fed – growing too quickly, they will raise interest rates to “slow things down.”

The Fed watches trends in: housing, inflation, wages, employment, business investments, consumer spending, and foreign economic issues.

Leveraging Home Equity to Create Wealth, Steven Marshall. Copyright © 2004 Steven Marshall. Published by Steven Marshall, Bellevue Mutual Mortgage, Bellevue WA.”