• Hi Guest - Come check out all of the new CP Merch Shop! Now you can support CigarPass buy purchasing hats, apparel, and more...
    Click here to visit! here...

Mortgage Advice

PuroEsq

PuroEsq

The Member Formerly Known as "JAEwing"
Joined
May 17, 2005
Messages
1,753
Location
Sacramento, CA
Jsut thought I would share a bit of my life with you all. About two and a half years ago when I was in my last year of law school my employer of almost 10 years decided that they did not need a sales force so I got the boot. (seems that did not work out so well since they were bought by FedEx shortly after) :laugh:

Well this of course caused a serious cash flow problem and we were forced to refinance or lose the house. We had to get the payment down a bunch so we got into an adjustable rate negative amortization interest only mortgage. Well it lowered our payment by about $500 per month so it was a great fix for us then.

Fast forward to a month ago.

I looked at my mortgage statement (not something I regularly do since my weife handles all of the finances) and notice that we actually owe more on the house now than we did when we first bought it over four years ago. Welcome to neg am!

So, earlier this week we just completed another refinance of the house (and the second equity line) into a better loan that will not add to the principle. Of course the mortgage payment went up . . . to the tune of about $500.

So my advice to you is to look at your mortgage and if you are in a neg. am. interest only plan get out now while rates are reasonable. Rates are climbing and with most neg. am. the payments keep going up too and you still are not paying anything on principle. My mortgage guy told me(and I have read some articles) of cases where the LTV (loan to value) on some people's homes who are ina neg. am. gets so hight that the mortgage company forces them to sell the house!

Ok my non-cigar-related-rant is over. This concludes your public service announcement for today.

Carry on.
 
boy, that really sucks. i hope everything works out for you in the end. i have always had and been a beliver in a conventional, 30yr /15yr fixed loans, period. my mortgage guy actually told us he makes more comission on the adjustable rate and non-conforming loans, but told me he wouldn't put cutomers into anything like that (imagine a loan officer that thinks of his customers, and not himself) due to the current fluctuations in rates.
 
Our neighbors from our previous neighborhood (does that even make sense :D) just had to sell their house after having this kind of loan. He had gotten laid off a couple of years ago and they refied with the same type of loan you had to use and got the payment down to a manageable level. They couldn't handle the coming increase in payment (his new job pays about 1/2 of his old one) and they had to sell and downsize.

My dad told me when we bought our first house to do nothing but a standard fixed rate loan. He even helped us with the DP on our first loan so we could afford to go that way. I'm glad he gave me that advice. A lot of folks up here are in for a big surprise pretty soon when their payments double.

I know many of them had circumstances that dictated they go that way (the job market here stinks), but some just used those ARM type of loans to buy more house than they could afford so they could live in the fashionable area of new development.
 
Excellent info thanks for the heads-up, all the mortgage talk and different loans is confusing, and i must say that sometimes those types of mortgages look good because of the low rate. I am a touch smarter thank you, we are possibly thinking of building a cottage in the future, this is a good example of what can happen when the rates do go up! :angry2:
 
To buy our first house (20 years ago) we financed it with a 1-year ARM. Nice and affordable when we moved in...but for the first 3 years the "adjustment" outpaced my raises...if you have ever searched the house at 3:00am for something to hock so you can buy baby forumula (our second one had allergies) you know the feeling of "living beyond your means". We ate a lot of Mac-n-Cheese and hot dogs. We sold it after 8 years (by then we had paid for a new roof and HVAC unit). We paid for new carpeting and to have the house pressure cleaned and I think we made less than $1000.

I remember standing in the front yard saying goodbye to the house...kids and wife are crying and I'm thinking to myself "I won't miss this place...".

No more ARMs for me.
 
Rob_k said:
i have always had and been a beliver in a conventional, 30yr /15yr fixed loans, period.
Click to expand...
Greetings! Yes, I agree with Rob_k. That is what I currently have. A consumer needs to shop carefully when obtaining a good home loan. I just wonder if mortgage rates will go even lower than they are at the present time. Regards, knightlaird
 
I have an I/O loan for the new home i'm having built. From everyone I have talked to they love this loan. I figure to have the house paid off in 8 years. We'll just have to see how it goes.
 
gtphale said:
I have an I/O loan for the new home i'm having built. From everyone I have talked to they love this loan. I figure to have the house paid off in 8 years. We'll just have to see how it goes.
Click to expand...

Interest works if the house is really going to increase in value for the term. Many people in Vegas are starting to sweat, thinking about their refinancing options. Might be able to get some bargains in the next couple of years, I think a lot of people will have to bail out.
 
I have an interest only loan.

These loans are for people who are diciplined and who will send that extra pricipal payment in every month so they do not fall into neg amortization.

I am trying to pay my home off and this is a great loan. The loan adjust with prime and is always figured out on your current principal balance.

For me there is nothing better.
 
If you did an ARM prior to June 2000 when the rate was 9.5%, you are still ahead and did quite well in the last 6 years. However, it is the folks who did an ARM in 2002 or later who are really having to pay now.

Just like the rule of thumb that says when to refi a conventional loan, there is one for ARMs too. When your rate has gone up 1% you should look at converting to a conventional 15/20/30 year loan.
 
Just bought a house, we are in escrow right now, it ends June 6th. I did an IO loan, just because it didn't make sense to me to put 10% down when the house cost so much money. I wanted to have that cash in my pocket for the just in case issues. I have one loan that goes to principle and one that pays the intrest, one is 6.45% the other around 9%, pretty good for someone my age.

coventrycat86 said:
I never made a mortgage payment in my life so this is all greek to me. ???
Click to expand...

I can just see CC walking up to the bank with two bags of money with green dollars signs on the outside ;)
 
Lots of people are going to lose their houses because they all purchased their homes with the miraculous "no money down" method. With the high prices of homes the way they have been for the last 8 years, when one doesn't have a dime to put down on a home, they shouldn't buy one. If someone wants to purchase a home, they should put something down so they will not have a high mortgage. This is what's causing homeowners to have hard times right now. They didn't put anything down when they initially bought their house and they all got loans that were adjustable rate loans and are paying more money now with the higher interest rates. Many people are going to lose their homes because of this particular move.
 
You've been here long enough to figure it out.

He has a car or two on blocks, drives a fancy, albeit old, car, doesn't have a mortgage and lives in a house. It's obvious he's on the dole. :whistling: :p

JAEwing said:
coventrycat86 said:
I never made a mortgage payment in my life so this is all greek to me. ???
Click to expand...


You a renter or have you always paid cash in full for your houses?
Click to expand...
 
RPB67 said:
I have an interest only loan.

These loans are for people who are diciplined and who will send that extra pricipal payment in every month so they do not fall into neg amortization.

I am trying to pay my home off and this is a great loan. The loan adjust with prime and is always figured out on your current principal balance.

For me there is nothing better.
Click to expand...

You are so right about this; if you don't have the discipline you could get yourself in a lot of trouble down the road. A lot of people used the I/O because the markets were going so out of control they thought they would buy this way and in a couple of years sell and make a profit. Now that the market is leveling off and in some cases values going down people are getting screwed.
 
Wayno said:
Lots of people are going to lose their houses because they all purchased their homes with the miraculous "no money down" method. With the high prices of homes the way they have been for the last 8 years, when one doesn't have a dime to put down on a home, they shouldn't buy one. If someone wants to purchase a home, they should put something down so they will not have a high mortgage. This is what's causing homeowners to have hard times right now. They didn't put anything down when they initially bought their house and they all got loans that were adjustable rate loans and are paying more money now with the higher interest rates. Many people are going to lose their homes because of this particular move.
Click to expand...

I would love to see you put 70k down on a 700k house, and still have enough money in your pocket just in case you need to pay the mortgage for a couple of months because work is slow.
 
It all comes down to discipline doesn't it? I would never do a I/O loan on anything that wasn't new construction.
 
You must log in or register to reply here.
Top