is an a r m mortgage okay for a short term until you get back to work ?

[zuki]

lets say you hurt your self at work and work/comp is avoiding paying because they would rather terminate you. so you get behind in payments because you are fighting with them in handling a case.

so you get an arm until you get back to work and then refi back to a 30 year mortgage once you can afford the payments.

  bad idea ?

what to do , if already in this boat ?

 

[brewer12345]

You talking about an option ARM? Assuming you can get one on reasonable terms (since you are behind in payments already), I suppose it is no worse than any other borrowing to keep yourself afloat. If it is a 30 year fixed with a low rate, I would probably try to get my hands on a HELOC or low rate credit card and pay it off when you get back on your feet.

Oh, and get a lawyer.

 

[JPatrick]

You'll have fees to refi to the ARM and fees to get back into a fixed.  The fixed will be higher than it is today. (probably) 
If you are sure you just need a temporary lift then the HELOC is likely the best provided your current job situation doesn't somehow block it.
Good luck.

 

[maddythebeagle]

I suspect that credit cards will be less likely to verify employement on new cards. Look at your existing cards for offers or call them up to see if there are any offers. Dont max them all out or else you risk getting credit cut.

 

[zuki]

i don't have any credit cards.

i just refied to this arm to swing the payments and get back to work.

now i want to get out of a arm and into what is the least amount of monthly house payment that is fixed.

 

[brewer12345]

So are you back to work? Everything hunky-dory now? If so, you should probably first look at your credit score. If you didn't take too much of a beating while you were out of work (say, score of 720 or better), you should be able to qualify for the best deals.

What kind of ARM do you have? Bear in mind that you will have to pay up (again) to refi into a fixed loan. Is the up-front cost worth it? How long do you plan to spend in the house? Are there alternatives to refinancing (maybe buying puts on TLT) that might be cheaper?

If you want a fixed loan with the lowest payment, I guess that would be a 30 year fixed interest-only loan.

 

[zuki]

i am not selling this house.and will be here for atleast 25 more years.

i have loked at many things, including that tardis program which explains paying it off in 9 years.

i am back at work , but already behind by getting this arm loan.
i had a 15year 4.25% fixed before i got hurt.

the arm floated me a few months, but now i have to get on track.
with what ever is best for me.

thanks

 

[brewer12345]

Gotcha. I'd suggest that you think of three possible solutions:

1) Keep the ARM. Instead of paying whatever they tell you is the payment, pay more. You can pay it down as quickly as you like, on a 15 year schedule for example.

2) Same as #1, but to hedge your risk of rising rates you can buy cheap out of the money puts on TLT or IEF (long and medium term treasury indexes, respectively). Since it will cost you up front fees in the thousands of dollars to refi, you might come out ahead this way.

3) Refinance to a 15 or 30 year fixed loan. This will cost you in fees and you may have to wait until your credit improves if you really did get behind on your mortgage payments (can't tell from what you wrote).

 

[zuki]

i went to a credit union and asked if they could give me a truth in lending stated package to compare.

 

[brewer12345]

i went to a credit union and asked if they could give me a truth in lending stated package to compare.

That's not a bad idea. I would also go to E-trade bank and put in your particulars to see what kinds of deals they can offer you. They guarantee the cash cost and rate, unlike other lenders who only provide a "good faith" (i.e. meaningless) estimate.

 

[zuki]

thank you.

 

[Dry Socks]

1) Keep the ARM. Instead of paying whatever they tell you is the payment, pay more. You can pay it down as quickly as you like, on a 15 year schedule for example.

I remember reading once that if you do this you need to make it clear that you're paying down the principal rather than pre-paying the payments.

 

[zuki]

i will check.