By Gretchen Macchiarella ... Recently, a shift in the market has caused long-term loans to have interest rates that are very close to short-term rates. For example, Lieb's 30-year fixed-rate loan comes with about a 5.25 percent interest rate, whereas the average rate on a 5/1 ARM in western states is 4.95 percent, and can be adjusted later. The technical term for the potential change in payments is interest rate risk. Delores Conway says it should be on the shoulders of the bank, not the individual. Conway, the director of the Casden Forecast for the University of Southern California Lusk Center for Real Estate, said people should jump at the opportunity to lock in favorable interest rates. She said the general consensus is that rates are going to go back up, although there still is a question of when. "Any opportunity we have, in good market conditions, to reduce that risk is definitely preferable," she said. The advice comes on the heels of last week's California Association of Realtors report, which showed the median price for existing homes in Ventura County hit a record $ 667,130 in May, up 8.5 percent from the same month a year ago. Some experts say there still is a small window of time to take advantage of low interest rates, others say the 30-year mortgage isn't right for most families who will move or refinance in a shorter time frame. For many buyers, the decision comes down to what they can handle financially and what will let them sleep at night.
