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Offlinechamp
pudding pop
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Registered: 06/27/01
Posts: 787
Loc: unknown trashscape
Last seen: 3 years, 8 months
buying a home?
    #6125042 - 10/02/06 04:14 PM (17 years, 3 months ago)

Does anyone have any mortgage-related advice they could give me? I'm specifically confused about Adjustable rate mortgages. I mean, I understand what they are but I don't know how beneficial they can be and what the serious pitfalls are.

I'm actually considering the 7/1 ARM from ing bank.
http://home.ingdirect.com/products/products.asp?s=OrangeMortgage

Any real estate professionals in the house that could point me in the right direction?


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Offlinedaimyo
Monticello

Registered: 05/13/04
Posts: 7,751
Last seen: 12 years, 40 minutes
Re: buying a home? [Re: champ]
    #6125087 - 10/02/06 04:26 PM (17 years, 3 months ago)

I know someone here deals with mortgages, just can't remember who at the moment. That said, here's what I think of it:

ARMs are useless right now unless you can't get approved for anything else. Back a couple years ago adjustable rates were excellent. Sometimes more that 2 percentage points lower than fixed. Now it's around half, or a quarter of a point if I'm up to date. Payments moving up like that can easily lead to negative amortization.


--------------------
"I have sworn upon the altar of God eternal hostility against every form of tyranny over the mind of man."


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InvisibleLiz
Owl Lady
Female User Gallery

Folding@home Statistics
Registered: 11/16/04
Posts: 6,962
Loc: Massachusetts
Re: buying a home? [Re: daimyo]
    #6125198 - 10/02/06 04:56 PM (17 years, 3 months ago)

That's me  :tongue:

7/1 ARMS are pretty stable, since your rate is fixed for 7 years and then "floats".  As long as you keep your credit in good standing and remember to refinance before the 7 years are up, or shortly after they are up, it can be a good thing to save money short term, but, with how low interest rates are right now, you might as well apply for a fixed rate loan if you can afford one.


--------------------
Remember, remember the fifth of November
The gunpowder treason and plot.
I see no reason why gunpowder treason
Should ever be forgot.




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Invisiblegettinjiggywithit
jiggy
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Registered: 07/20/04
Posts: 7,469
Loc: Heart of Laughter
Re: buying a home? [Re: champ]
    #6125587 - 10/02/06 06:46 PM (17 years, 3 months ago)

Go for a fixed, I just did-close this Friday. Rates will be slowly rising.

Why  refinance up the road if the best you might be able to do later is a 7.5 or higher, when you can still lock in lower now.

Besides, refinancing is expensive. You have to pay closings costs all over again.

When shopping for fixed rates, compare by everything else being the same. Some offering in the fives, or low six's will hit you up front with higher points or bogus closing fees which are legal for them to add on, but not necessary to get a loan.

One of them they call an "origination fee" and say its standard, but its just something a loan officer slips in to make more commission money off of you. They already get one from the bank.

Make sure you get a loan with no pre payment penalty. It can bite you in the ass if you have to sell or refinance before the date.

Its also worth it to find a closing attorney and have him review all loan agreements before you sign them AND come to closing with you as banks/officers sometimes try to slip in last minute fees and say, they are "standard".  Bull. The attorney will get the removed on spot.


Best wishes with it all and enjoy your new home! :cool:

:peace: :heart:


--------------------
Ahuwale ka nane huna.


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InvisibleLiz
Owl Lady
Female User Gallery

Folding@home Statistics
Registered: 11/16/04
Posts: 6,962
Loc: Massachusetts
Re: buying a home? [Re: gettinjiggywithit]
    #6127450 - 10/03/06 05:50 AM (17 years, 3 months ago)

Quote:

gettinjiggywithit said:
Go for a fixed, I just did-close this Friday. Rates will be slowly rising.

Why  refinance up the road if the best you might be able to do later is a 7.5 or higher, when you can still lock in lower now.

Besides, refinancing is expensive. You have to pay closings costs all over again.

When shopping for fixed rates, compare by everything else being the same. Some offering in the fives, or low six's will hit you up front with higher points or bogus closing fees which are legal for them to add on, but not necessary to get a loan.

One of them they call an "origination fee" and say its standard, but its just something a loan officer slips in to make more commission money off of you. They already get one from the bank.

Make sure you get a loan with no pre payment penalty. It can bite you in the ass if you have to sell or refinance before the date.

Its also worth it to find a closing attorney and have him review all loan agreements before you sign them AND come to closing with you as banks/officers sometimes try to slip in last minute fees and say, they are "standard".  Bull. The attorney will get the removed on spot.


Best wishes with it all and enjoy your new home! :cool:

:peace: :heart:




Origination fees ARE standard.  It's the customers choice whether to pay an origination fee or not, but usually, it's a good idea to, since it lowers the rate when you pay 1 or 2 points.  So, depending on the loan size, what you save per month with the lower interest rate usually pays itself back to you fairly quickly.  Points are not a bad thing.  Yes, they are upfront money, and for some people buying their first home, they are unable to afford that, but everyone needs to make money, and mortgage companies do a LOT of work when you apply for a loan.  They either make their money on the premium of the interest rate, or through your closing costs, they don't ALWAYS make money from the bank, as your posts suggests.  You can see in plain english on the HUD Settlement statement exactly how much money they made off of you, it will be a line stating the amount that the lender is paying to the mortgage company.  Don't let them screw you over, but don't expect them to do all of the work they do for nothing, either.  I've been an underwriter, a loan officer, and a mortgage processor for the last 5 years, so I know the whole process like the back of my hand - and it's a lot of work.


--------------------
Remember, remember the fifth of November
The gunpowder treason and plot.
I see no reason why gunpowder treason
Should ever be forgot.




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