Transcripts

Bert Whitehead:
The kind of mortgage to get virtually ninety-five percent of the time is the thirty-year fixed. That's plain vanilla.

Financial advisor Bert Whitehead, author of the book and DVD (and host of the PBS special) Why Smart People do Stupid Things with Money…

It gives you a low payment - if you want to pay it off ahead of time you can, but the big advantage of the thirty-year fixed mortgage is that it protects you against inflation. Because if, after the Iraq war for example, we end up like we did after the Vietnam war and oil goes to $500 a barrel and inflation goes through the roof and you'll see money market accounts paying nine or ten percent, you would love to owe a bank a couple a hundred grand at six percent fixed. On the other hand if interest rates go down, you just re-mortgage and your house payment goes down.

The thirty-year fixed rate mortgage is such a bargain, says Bert, that you may see it disappear in the next five to ten years.

That's a lot of risk to take for a financial institution - to guarantee an interest rate for thirty years. If you don't have a thirty-year fixed now then I would really consider making sure your next mortgage is a thirty-year fixed.

At somethingyoushouldknow.net I'm Mike Carruthers and that's Something You Should Know.