Time to lock in that mortgage?

I find it very funny how people are so quick to blame banks, government, friends,etc...(you get the point) for telling them or tricking them into locking in high rates or taking out big mortgages. No one forces anyone to do anything. Most people want big houses, fancy cars and big tv's right away so they can act like the big shots that they are not.
First, it is your fault for getting a big mortgage and not the banks....get a piece of paper and draw up a budget to see what you can afford.
Second, go on any bank or financial website and see how much your payments really changes when the rate goes up. I have seen people pay thousands of dollars in penalties to break a mortgage contract and renew into a lower rate so they can save $50 per month. Makes no sense, most bankers will tell you its not worth breaking a contract, but no one listens.

Reading the last comment by Joey is quite something, he seems like a very smart guy. I do love the comments he makes about the banks pulling all these big scams. How about the all the realtors, realestate companies and the realestate boards announcing the big jumps in home prices that are going to happen in each major city. Since the big drop in the economy the realtors have been scaring everyone by telling them to buy now as the prices are going to go up, sounds like a pretty good scam to me as they scare people into the housing markets.
The commissions they make are pretty good too.
I would rather buy a basket of canadian bank stocks than a revenue generating property, especially since the banks rip everyone off and pay huge dividends.

I am in a 3 yr open variable at 2.91%.(saving 700$ compared to previous 3 yr lock in rate. I was pressured into doing something as my renewal was due April 1/10and no one was getting back to me. I tried other banks, I tried mortgage brokers. I finally called one bank with their new rate. I was also trying to consolidate which would have brought my mortgage to 399k. If locked into a fixed 3 yr term my mthly mortgage payments would be 100$ less /mth than my previous locked in 3 yr term at 5.85 for 350k.if i cannot consolidate ,am I better to stay at my open variable at 2.91% or lock it in at this point? I am not healthy and am permanently disabled. My husband works very very hard and we have 4 children. everything else is suffering and we need extra cash flow /mth. I am not a banker and need someone to trust. 3 of our four children have life threatening illnesses, we need to doctor and cannot afford to. please someone help me to know what to do.

Hi "scared ruby"--I'm going to start by saying try to relax. (I can tell you this. In my own life, I've been through hell and wondered if I would survive.) I consulted my hubby about this one.
By the sounds of it, your mortgage is quite high. There's a possibility that it would do your family alot of good to start by downsizing. (Yes, it costs up front, but in the long run, it might be better.) If you think you don't have money to move, start saving NOW, and move as soon as possible.
About your mortgage...(I'm in Canada.)...Hubby says the only basic difference between an open and closed mortgage...an OPEN you can PAY OFF at any time. However, if you have alot of debt, you will not be thinking about paying off a mortgage. Therefore, in this situation, CLOSED is better. (A CLOSED mortgage is cheaper interest.) Hubby also says you can consolidate either way. No worries there.
Now, as far as the health of your family...it sounds like you live in the states. My suggestion (family is american)...do you have health coverage at all? My family says (and they are poor), it's only $20. a month for basic coverage. If you have the coverage, use it as much as you possibly can.
Lastly, I've been through very hard times myself. You are going to have to QUIT spending money completely, where it is not necessary. So, beyond food, mortgage and clothes, no going out. You probably have already done this, I'm just confirming. (The simple pleasures in life is where you put your focus now.)
That's it for now. I feel for you. I know what hard times are like. Let me know what happens and if you have any more questions, I'll try hard to answer them. Bye for now.

Thank you, Lisa for some tips. I didn't know the difference between Open vs Closed mortgage - so that has helped me figure ut which variable type I should be considering (or not considering at all). I recall when I first had a variable rate mortgage for the 1st year, a lot came off my principal before I locked in for fixed at 5 yrs. Since I locked my mortgage (because I reacted with the rate increase), my payments to my principal was much smaller.....it seemed that way to me. This time for sure, I will go back to variable rate.

I purchased a revenue property in the spring of 2008. I used all of banks money...they actually encouraged it.
I borrowed 135 k at prime. It was around 6% at the time. Since the crash the banks decided to make my loan prime plus 1% now that p***ed me off royaly. Anyway I thought about locking in then changed my mind. My plan is to pay it off ASAP...I now have it down to 85 k at prime plus one. with a good renter in thier...they are happy and I am happy...with rates down and my balance down I take home a little extra each month and the amount I take home has been growing as I pay fown debt...I figure with alot of restraint I can have it 100% paid for in four years any-ways. So why lock in? Why have a dam nickle in any savings account? Why when If a dollar spent on towards debt is that percentage point saved the higher the rates the more I save in the long run in a sense. GET OUT OFF DEBT ASAP is my plan.
Do the math... rates were cut in half since I borrowed during those low rates I sunk all the savings into paying debt....so now I really dont care what the rates go up to...if prime goes above 8% I still break even as long as I keep my renter and as long as dont borrow ever again.

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There are a lot of comments on here that don't make sense as people are not knowledgeable enough. People are complaining that banks are evil for raising rates before the BOC does. People, the BOC has nothing to do with the fixed rate. The fixed rates act independently of the variable. The variable rate is dictated by the BOD. The variable is influenced by the bond market, inflation and other variables that have zero to do with the bank of canada. Further, variable has almost always been better in last 30 years with the exception of 2 or 3 periods of rebound after a traumatic market downturn. That sounds like now to me. The next 5 years may very well be the exception where fixed outperforms variable. A lot of people on here keep talking about how the rate would have to go up enormously for it to affect them. The real question though is, when the variable reaches your risk threshold, then what will you do? It is too late to switch to fixed then as fixed will be way higher. If you have any possible risk that you may not be able to afford your payments if rates rise too much then what you need to do is pay very close attention to the fixed rate and lock it in where you are comfortable. If you wait and see if you can afford the variable it will be too late. If not being able to make the payment is not a concern then I would just ride the variable personally as even the fixed rate has a good chance of performing well in the near term, if your amortization is beyond the 7 year mark out, you will probably still win on variable. It all depends on a persons' personal financial situation and there is no cookie cutter advice that applies to everybody. You need to look at your own situation.

I find this article weak and frankly reflects the inability of the journalist to provide an article that has any meaning. The info from the feedback is more relevant in my opinion and leaves me all the more convinced that doing your homework rather than reading a clipped article like this is the best advice.

I had a half point below prime mortgage that expired Dec 2009. I see people in this thread talking about the below prime mortgage. When I went to get mine renewed, that option was no longer there. It is now a quarter or half OVER prime.

I decided to lock in for 5 years at 3.65. At the time, the variable rate offered by the bank wasn't much better (less than half a point difference). I figured that the rates have bottomed out and would only go up from there. I figured it was a good time to lock in. I doubt I will lose on this one. I might lose in the short term, but as rates rise, my locked in rate will pay dividends in the backend to at least break even(comared to a variable rate). I will probably go back to a variable after this mortgage finishes.

@ Bonaventure. This is not true about payments not changing. We have a "prime minus" vaiable mortgage and our payments change with every rate change.

You are welcome Susan. However, to anyone reading this article. DO YOUR RESEARCH before buying a home. Remember, it is probably the biggest purchase you will ever make. DON'T rely on institutions to have your best interest at heart. Remember, everyone (except your family and closest friends) are out to make a buck on you. Banks are no different.
"Joey" had a great article. I never knew "40 year" mortgages ever existed until I read that. I find that ludicrous, by the way. In my opinion, there shouldn't be mortgages higher than 25 years. Why?? Well, you have your kids and your retirement to eventually think about. You should never be allowed to take a mortgage that is going to take you 30-40 years to pay off. Also, I don't know if anyone realizes this, but when real estate agents calculate out how much you can afford they base it on your GROSS INCOME NOT your NET INCOME. I also believe this is ludicrous!
Cheers to all.