30-year Mortgage Rates highest in 15 months

[gldstwmn]

Originally Posted by strandinthewind

EEK - is the rate better or worse. I mean if it is worse, why not just pay an extra $100 a month on your reg. mtg. and knock both down.

They're called option ARMS and the rate is never really fixed on them. You have a "start rate" of say 1-2% and that figure is actually deferring interest monthly. It's all index driven and the key with them is the margin. So the margin plus whatever the index is currently at determines your fully ammortized payment. And that 1-2% start rate doesn't cover that. So the interest is deferred until it is time to begin making fully ammortizing payments again. The option ARM usually offers four monthly options to pay your mortgage: the start rate, the interest only rate (determined by adding the margin and the index), a 15 year am, or a 30 year am (determined again by adding the index and your margin).

[irishgrl]

Originally Posted by gldstwmn

They're called option ARMS and the rate is never really fixed on them. You have a "start rate" of say 1-2% and that figure is actually deferring interest monthly. It's all index driven and the key with them is the margin. So the margin plus whatever the index is currently at determines your fully ammortized payment. And that 1-2% start rate doesn't cover that. So the interest is deferred until it is time to begin making fully ammortizing payments again. The option ARM usually offers four monthly options to pay your mortgage: the start rate, the interest only rate (determined by adding the margin and the index), a 15 year am, or a 30 year am (determined again by adding the index and your margin).

dont people see that they are only putting off the inevitible and if they have difficulty paying the regular amortized payment, then they prob have no business buying that particular house?? Anything that sucks you in by offering a deferred rate up front only to be tacked on later (at God knows what kind of interest rate) is too much of a gamble? At least it is for me....
I like knowing what my payments are going to be each month.

One thing tho: the last time my taxes were assessed, my value went up so my impound amount went up, thus my monthly payment went up even tho I know my payments are actually supposed to be less (amortized) over time.
I understand it, but now Im afraid that instead of actually decreasing over time as I had hoped, my payments will actually increase as my value increases. I wasnt told about this possibility....

I bought my place in Feb/March 2003 and I paid 5.87% 30yr fixed. I consider myself pretty lucky to have gotten that good of a rate considering I had so-so FICO scores and I bought a manufactured home which apparently is penalized by adding points. yay. Oh well, at least it was under 6% which is all I cared about. Now, all I need to do is get the PMI taken off (as soon as I can pay for an appraisal that is....) and I can save about $600/yr......

[strandinthewind]

^^^

Well, many people realize they will make more money five years form now than they do now. Also, many will sell that hosue and move on in two years. That up to $250,000 tax free gain is essentially free money from the govt. Why not take advantage of it. It is like working half as much and getting paid the same when the tax benefits are considered.

Also, if the value went up, then call your mtg. company and ask them to assess the value - if they will for free, it is worth the shot

Finally, thanks Goldie for the exp.

[irishgrl]

Originally Posted by strandinthewind

^^^

Well, many people realize they will make more money five years form now than they do now. Also, many will sell that hosue and move on in two years. That up to $250,000 tax free gain is essentially free money from the govt. Why not take advantage of it. It is like working half as much and getting paid the same when the tax benefits are considered.

Also, if the value went up, then call your mtg. company and ask them to assess the value - if they will for free, it is worth the shot

Finally, thanks Goldie for the exp.

I dont know about your pay raise, but I got a whopping 1% pay raise, and I know for a fact that that is WAY below the extra amount I pay in taxes..
I never understood the need people had for moving from house to house every two years. you cant build any equity that way and unless you are in the type of field that will guarantee you a hefty pay raise, it just isnt feasible.
All you end up doing is buying an ever more expensive house and you're gambling that you'll be able to afford it.

Im sitting tight because I can afford the house I have now....and as time goes by, I hope to be able to pay it off faster, and maybe buy a second house.
for me, its merely an investment to pass on to my kids. My house is only 3 1/2 years old so by the time I die, it wont be so bad like some of the older models Ive seen. not only that, my daughter and son in law can have it hauled off and build a stick home here. I own my own land which is a plus. so Im not complaining.

I wanted to post this picture and dont have enuff room in my siggy so here goes:

[gldstwmn]

Originally Posted by irishgrl

dont people see that they are only putting off the inevitible and if they have difficulty paying the regular amortized payment, then they prob have no business buying that particular house?? Anything that sucks you in by offering a deferred rate up front only to be tacked on later (at God knows what kind of interest rate) is too much of a gamble? At least it is for me....

I had one client who was a first time homebuyer at the age of almost 60. She wanted the tax break from owning a home but wanted the lowest payment possible. She insisted on doing the option ARM even though I was very careful in explaining to her what the pitfalls were. She told me that she didn't care because when she died, she didn't have anyone to leave the house to anyway. I thought that was kind of sad. She's really a nice lady.

Originally Posted by irishgrl

One thing tho: the last time my taxes were assessed, my value went up so my impound amount went up, thus my monthly payment went up even tho I know my payments are actually supposed to be less (amortized) over time.
I understand it, but now Im afraid that instead of actually decreasing over time as I had hoped, my payments will actually increase as my value increases. I wasnt told about this possibility....

I bought my place in Feb/March 2003 and I paid 5.87% 30yr fixed. I consider myself pretty lucky to have gotten that good of a rate considering I had so-so FICO scores and I bought a manufactured home which apparently is penalized by adding points. yay. Oh well, at least it was under 6% which is all I cared about. Now, all I need to do is get the PMI taken off (as soon as I can pay for an appraisal that is....) and I can save about $600/yr......

The tax assesment is something that is controlled by the city/county. So as a loan officer, I could only speculate on what is going to happen with property taxes.
5.87% is a very good rate for manufactured/ Yes, they're viewed as a higher risk by the investors (so are condos). You're lucky to have bought it when you did. Many lenders got away from doing manufactureds later in 2003. Virtually the only way I see to buy them and obtain a decent rate now is to go FHA.

[gldstwmn]

Originally Posted by strandinthewind

Also, if the value went up, then call your mtg. company and ask them to assess the value - if they will for free, it is worth the shot

That's risky though. I think she should just leave well enough alone.

[skcin]

We've been in our house for 5 years & we refi'd twice in that time. Our first mortgage was an FHA gov't loan @ 8.25%! Now we're around 5% & I'm able to make a couple of extra payments every year. I'm not going ANYWHERE anytime soon.

I truly do not understand who would possibly want & benefit from an ARM.

[gldstwmn]

Originally Posted by skcin

We've been in our house for 5 years & we refi'd twice in that time. Our first mortgage was an FHA gov't loan @ 8.25%! Now we're around 5% & I'm able to make a couple of extra payments every year. I'm not going ANYWHERE anytime soon.

I truly do not understand who would possibly want & benefit from an ARM.

Investors.

[skcin]

Originally Posted by gldstwmn

Investors.

I don't get it - do you mean someone who's going to flip a house? Someone who won't be staying in the home long, so they'll benefit from that low initial rate & then get out before it goes up?

[irishgrl]

Originally Posted by skcin

I don't get it - do you mean someone who's going to flip a house? Someone who won't be staying in the home long, so they'll benefit from that low initial rate & then get out before it goes up?

thats what it looks like to me....

I suppose if you have a lot of fluid cash to work with, its a bonanza, but at some point, it seems to me that even an investor would hit a wall because if I read the signs right, housing starts are slowing and the buying boom is faltering.

The area around where I live is kinda ripe for development (which is sad because there's so much history around here from the gold rush days) but developers have all the power, they come in and buy a property and inform the local community they plan on building and it seems to me that no amount of public hearings or botched EIR's (or Negative Dec's) or conflicts between jurisdictions (county vs. city) can stop them! They just bulldoze their way across virgin lands and its a dirty shame...Im kinda turning anti-development, esp after that crappy Supreme Court farce of a decision re: eminent domain.....(not sure of the spelling, Ive seen it spelled several ways) (Kelo v. City of New London)

ah crap....I feel like poo, been sick for three days now--not fun at ALL!

[irishgrl]

Originally Posted by strandinthewind

Also, if the value went up, then call your mtg. company and ask them to assess the value - if they will for free, it is worth the shot

Actually I did contact them, and I could get the PMI taken off if I had it reassessed (which costs about $350 in CA, which I dont have right now btw). Ive already been told by my Realtor that she'd list the place for a good 30-40k more than what I paid two years ago....thats well over the necessary 20%(is that right?) loan/value ratio I need to get the PMI taken off....so, if I had an extra $350 lying around, I'd be getting this place assessed in a hot second! I could save about $600/year if I took of the PMI!!!!!

ah well, maybe at tax refund time, I can afford it. it would be money well spent I think.....Goldie: I heard about something called an "automated valuation" (I think thats it) that youse folks in lending can do. care to fill me in? does it go by zip code? sq ft? what?

[strandinthewind]

Originally Posted by irishgrl

I dont know about your pay raise, but I got a whopping 1% pay raise, and I know for a fact that that is WAY below the extra amount I pay in taxes..
I never understood the need people had for moving from house to house every two years. you cant build any equity that way and unless you are in the type of field that will guarantee you a hefty pay raise, it just isnt feasible.
All you end up doing is buying an ever more expensive house and you're gambling that you'll be able to afford it.

Im sitting tight because I can afford the house I have now....and as time goes by, I hope to be able to pay it off faster, and maybe buy a second house.
for me, its merely an investment to pass on to my kids. My house is only 3 1/2 years old so by the time I die, it wont be so bad like some of the older models Ive seen. not only that, my daughter and son in law can have it hauled off and build a stick home here. I own my own land which is a plus. so Im not complaining . . . .

If you owned a home just about anywhere in the last ten years and flipped it every two years to take advantage of the tax benefits, you would have on average made at least $100,000 tax free and the vast majority muh much more

As for the pay raises, many do get such raises though you do not.

Non-conventional 30 year fixed loans are not for everyone, but they have their benefits for others.

[gldstwmn]

Originally Posted by skcin

I don't get it - do you mean someone who's going to flip a house? Someone who won't be staying in the home long, so they'll benefit from that low initial rate & then get out before it goes up?

Yes. That's a possible scenario.

[gldstwmn]

Originally Posted by irishgrl

ah well, maybe at tax refund time, I can afford it. it would be money well spent I think.....Goldie: I heard about something called an "automated valuation" (I think thats it) that youse folks in lending can do. care to fill me in? does it go by zip code? sq ft? what?

I personally don't have occasion to use automated valuation but basically what I think they're doing is just running comps.

[irishgrl]

Originally Posted by gldstwmn

I personally don't have occasion to used automated valuation but basically what I think they're doing is just running comps.

who can do these and is there a fee? I am trying to avoid the high price tag if possible...