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Re: Surprised the rate on your ARM increased?
Old 04-05-2006, 07:06 AM   #21
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Re: Surprised the rate on your ARM increased?

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Originally Posted by audreyh1
Nearly 25% of mortgages are ARMs?* Mostly to people with sub-par credit?

Now that's scary!

Audrey
In the bubble markets of CA and other places (Denver, et al.), over 50% of the mortgages taken out in 2005 were a particularly pernicious variety known as the "option ARM". Google that phrase and see why there arre big problems ahead for certain real estate markets.
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Re: Surprised the rate on your ARM increased?
Old 04-05-2006, 11:38 AM   #22
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Re: Surprised the rate on your ARM increased?

Quote:
Robert, now 78, was working as a deliveryman. But his employer went out of business last April. Now he and Lorraine, 72, a retired nurse, are both seeking work. The rate on their mortgage has jumped from 7% to 10.5%.
Hey Robert, I spell it out for you ...

R-E-V-E-R-S-E M-O-R-T-G-A-G-E.

Note to self: ya can't take it with ya.

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Re: Surprised the rate on your ARM increased?
Old 04-05-2006, 02:05 PM   #23
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Re: Surprised the rate on your ARM increased?

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Originally Posted by tryan
Hey Robert, I spell it out for you ...

R-E-V-E-R-S-E M-O-R-T-G-A-G-E.

Note to self: ya can't take it with ya.
Good idea except "When they refinanced their home two years ago to pay off some bills...". Those "bills" probably sucked all the equity out of their house. They are probably in debt up to their eyeballs and have zero equity in the house TO get a reverse mortgage on.

I do feel sorry for him a little though, since he's 78 and the bills were probably incurred for medical reasons.

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Re: Surprised the rate on your ARM increased?
Old 04-08-2006, 02:38 PM   #24
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Re: Surprised the rate on your ARM increased?

Hummmm

I started with a 7.875% mortgage in 1996 which we changed to a 6% for no cost with the same bank in 2000, then went to a true 3/3 ARM at 3.875 in 2003 which is now going to 5.875 for the next 3 years, BUT I have the house on the market, never took out any equity when we refied and costs were negligible so my house will sell in the 500,000 range and owe 199,000. Bought the place for 236,000 in 1996.

The Arm worked for me, BUT I know what I am doing. Heck the max it could go is 9.5% on the life of the loan if I stayed but if I was staying I would refi to a fixed soon.
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Re: Surprised the rate on your ARM increased?
Old 04-08-2006, 03:00 PM   #25
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Re: Surprised the rate on your ARM increased?

ARMS can be a great idea if your horizon to sell is pretty short (less than 3 years).
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Re: Surprised the rate on your ARM increased?
Old 04-08-2006, 03:03 PM   #26
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Re: Surprised the rate on your ARM increased?

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Originally Posted by Cute Fuzzy Bunny
ARMS can be a great idea if your horizon to sell is pretty short (less than 3 years).
...or if you are going to pay it off within that time frame.

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Re: Surprised the rate on your ARM increased?
Old 04-08-2006, 03:08 PM   #27
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Re: Surprised the rate on your ARM increased?

Yep. The best mortgage rate of all...paying it to yourself!

My credit union had some stunning deals on 3/1 5/1 and 7/1 fixed/adjustables a few years ago.

The 5/1 was slightly under 4% for the first 5 years, then the usual 'up to 2%' a year adjustment.

For most people, who live in a home for 5-7 years...what a great deal that was.

I remember posting as to whether the folks here thought it would be a good idea to pull a few hundred thousand on that 5/1 and try to arb it. The collective consensus was that it wasnt a good idea. You guys dont know anything! I'd have made a bundle
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Re: Surprised the rate on your ARM increased?
Old 04-08-2006, 03:14 PM   #28
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Re: Surprised the rate on your ARM increased?

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Originally Posted by Cute Fuzzy Bunny
I remember posting as to whether the folks here thought it would be a good idea to pull a few hundred thousand on that 5/1 and try to arb it. The collective consensus was that it wasnt a good idea. You guys dont know anything! I'd have made a bundle
Obviously you don't have the right chiropractor or you could get an adjustment...

http://www.washingtonpost.com/wp-dyn...040602079.html

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Re: Surprised the rate on your ARM increased?
Old 04-08-2006, 03:14 PM   #29
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Re: Surprised the rate on your ARM increased?

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Originally Posted by REWahoo!
...or if you are going to pay it off within that time frame.

I got an ARM HELOC as a first mortgage in 2002 at prime minus .75 because I was in a fixed rate at 6.625% and the ARM was very cheap. Now it will be 7% so not much more than my old fixed rate and I had 4 years of cheaper credit. The HELOC had no cost to get it and refinancing to a fixed would cost about $3K. I don't want to pay 7% so this month I sold some stock and paid it down a bit. Now I owe 67K so my payments being interest only will probably be under 400 still. It it shot up to 10% or something I would pay it off from my ROTH IRA contributions or coversions from more than 5 years ago.
Nobody tricked me into an Interest only ARM that adjusted monthly, and you don't need to feel sorry for me.
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Re: Surprised the rate on your ARM increased?
Old 04-08-2006, 08:57 PM   #30
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Re: Surprised the rate on your ARM increased?

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Originally Posted by Cute Fuzzy Bunny
I remember posting as to whether the folks here thought it would be a good idea to pull a few hundred thousand on that 5/1 and try to arb it.* The collective consensus was that it wasnt a good idea.* You guys dont know anything!* I'd have made a bundle *
Gosh, I thought at the end of the 5/1 you were going to roll it over to a wad of zero-interest credit-card balance transfers!
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Re: Surprised the rate on your ARM increased?
Old 04-08-2006, 09:03 PM   #31
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Re: Surprised the rate on your ARM increased?

Whadda I look like? JG?
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Re: Surprised the rate on your ARM increased?
Old 04-08-2006, 09:06 PM   #32
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Re: Surprised the rate on your ARM increased?

Quote:
Originally Posted by Cute Fuzzy Bunny
Whadda I look like? JG?
Now that you mention it, your new avatar does look a little familiar!

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Re: Surprised the rate on your ARM increased?
Old 04-08-2006, 09:09 PM   #33
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Re: Surprised the rate on your ARM increased?

The rabbit or the fat guy?

The fat guy isnt even wearing dinner plate sized glasses...
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Re: Surprised the rate on your ARM increased?
Old 04-09-2006, 06:04 AM   #34
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Re: Surprised the rate on your ARM increased?

the same thing happened in the berkshires in mass..homes went for a fraction as people bailed out of the area as jobs dried up
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Re: Surprised the rate on your ARM increased?
Old 04-09-2006, 11:37 AM   #35
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Re: Surprised the rate on your ARM increased?

I have an ARM. I got it almost 2 years ago to consolidate debt and to do the "cash out and arbitrage the balance" thing on my free and clear house. Rate is still 3.75%. In July it goes to 4.75% and then can go up or down 1% every 2 years. When I got the loan, 30 year fixed rates were ~5.5%. I figured it would take about 12 years before the fixed rate mortgage would be better than the ARM, due to big savings on interest in the first decade or so.

Then there's the fact that the mortgage was pretty small at about 1.3x our annual income. And who knows if we would still be living in the same house 12 years down the road? Or that rates wouldn't stay low or go up and then back down? Too many unknowns leaning towards the ARM. Almost 2 years into it and having 15% of it paid off, I feel pretty good about my decision.

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Re: Surprised the rate on your ARM increased?
Old 04-09-2006, 10:05 PM   #36
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Re: Surprised the rate on your ARM increased?

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Originally Posted by Laurence
And why is his ARM Mortgage higher than my 20 year fixed in San Diego? These examples make a good story on the surface, but they don't pass the smell test. Not typical, even for spendthrift Americans.

Not to get too off topic, but while I like to bash predator businessmen/legal loan sharks as much as the next guy, I don't feel much sympathy for people in over their heads on mortgages. People will spend 40 hours figuring out their NCAA brackets or football pools, but can't go to lending tree or do a little research to make sure when they sign the most important documents (probably) in their life, they aren't getting a raw deal?

My MIL just vented to me she thought she was going to lose the house. She and FIL seperated about a year ago (total mid life crisis-whatever), he's paying ~$1,000 a month (they have two kids still under 18), and they bought their house over ten years ago for ~$120,000, and she makes a pretty good wage, 20 years in a govt. job. Yet somehow she can't make what should be $1200-$1300 payment, tops?

I tried to help her, but it was no use, run up credit cards, refinance and pay off. Nail in the coffin was getting a pool put in right before they seperated. On the one hand, she admits she wouldn't have done it if she had known what was coming, but it should have never been that close to the edge in the first place.

Even still, I tried to sit down with her and work the numbers, figure out what she can do. The more I dived in, the more my head was reeling, $200+/month on "whole" life insurance on the kids? How much for car insurance? I told her what she needed to do, I garantee she hasn't done it. And six months from now things will be even worse and she won't remember this conversation.

I love her very much, she is the best MIL one could ask for in many ways, but she suffers from a mental block that I just don't think is curable. I told DW that if it comes to it, we'll buy a bigger house and have her move in, pay us rent that is equivalent to the difference in the house payment. She's great with her grandaughter, and I couldn't bear the thought of her living anyplace but a nice home.
When an ARM or IO loan goes to fixed rate, its usually based on the LIBOR rate plus a premium of 2% or so. Right now the LIBOR is around 5%. Last year it was around 4% I think. From what I read somewhere this year only around $350 billion in ARM and IO mortgages will go fixed. Next year it's around $1.5 trillion and I think even more in 2008. A lot of people who bought expensive homes will soon have their payments double or more.
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