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how does this loan look?

Z

zixxer

Diamond Member
COMPLETE re-edit.

I decided to go with an ARM. I am not out of school, and will make considerably more when I am out. Also, while my credit is perfect, I don't have much of it. If I go with an arm, and refinance in 5 years at the end of it (when more than likely I'll be making much more money, will have tons more credit, and will be wanting to move anyway..) then the arm will save me money in the long run. the savings per month is worth more to me now than it will in 5 years. The LOWEST fixed rate I could find was about 6.9%. Here are the details of the main ARM I am looking at:

The 5\1 ARM info from the mortgage guy:



For the first 5 years the rate is 5.5%. This is a fixed rate and can not change in those 5 years. In the 6th year on the fist payment the rate will adjust up or down depending on where that rates are at that time. The interest rate can only adjust 1 time per year and can only go up or down by as much as 2 points. i.e. rates get worse and your rate goes up 1.5% your new interest rate for the 6th year is 7%. This happens for years 6-10. Your rate however can only increase to 10.5%. There is a cap of 5%. In the 11th year what ever your rate is at the time that is your rate for the remainder of the loan.





The adjustment can only go up 2% per year. And you interest rate can?t exceed 10.5% here is a worst case scenario for your loan.



Years Adjustment Rate

1-5 0 5.5%

6 as much as 2 7.5%

7 as much as 2 9.5%

8 only 1 10.5%

9 0 10.5%

10 0 10.5%

11-30 no adjustment 10.5%

 
www.eloan.com

www.paulfinancial.com (this place gives you everything from guidline requirements of the products to pricing).

ps: you may want to speak to a loan officer at a brokerage, give them a general idea of what you're looking for and simply state your shopping. They have access to lenders who don't make their product/pricing available to the public. There are endless amounts of lenders out there and they all have a *niche* product, you'll never find the best deal shopping on your own.
 
Originally posted by: armatron
my realtor recommended some guy at amtrust.. where I got 7.25%... that sounds really high to me.. I thought home loans were at like 5.5% right now or something?
Click to expand...

7.25%??? if you're talking about a 30yr fixed then you're getting raped. Secondly, no bank will lock you in the rate unless you have a sales contract on the property. The longer you wait, the higher it wil get. Just read on Yahoo this morning that rates have been climbing for 18 weeks straight now.
 
Originally posted by: AnyMal
Originally posted by: armatron
my realtor recommended some guy at amtrust.. where I got 7.25%... that sounds really high to me.. I thought home loans were at like 5.5% right now or something?
Click to expand...

7.25%??? if you're talking about a 30yr fixed then you're getting raped. Secondly, no bank will lock you in the rate unless you have a sales contract on the property. The longer you wait, the higher it wil get. Just read on Yahoo this morning that rates have been climbing for 18 weeks straight now.
Click to expand...

that's odd. the one house i almost bought (before finding out it had polybutylene pipes) wanted me to be approved before any contract or anything was done on the property.


it's 30 year fixed
 
Originally posted by: AnyMal
Originally posted by: armatron
my realtor recommended some guy at amtrust.. where I got 7.25%... that sounds really high to me.. I thought home loans were at like 5.5% right now or something?
Click to expand...

7.25%??? if you're talking about a 30yr fixed then you're getting raped. Secondly, no bank will lock you in the rate unless you have a sales contract on the property. The longer you wait, the higher it wil get. Just read on Yahoo this morning that rates have been climbing for 18 weeks straight now.
Click to expand...

Not sure where you got that info, but thats completely not true. We purchased a house in April. I got preapproval with a letter from my lender and then went looking for houses. It's always better to have a letter saying you have that amount of money when putting an offer on a house.

The rates were set at a 30 day lock, meaning we got those rates for 30 days. If we didn't find a house in that time..we lost the rates and went to whatever they were at that time.

I basically went to the bank..said how much can I afford..they told me..I took a percentage off that (cause they will give you way more than you should spend 🙂 ) then the wife and I went shopping. We actually had already been shopping, but this gave us a better ball park of what we'd be spending and the range.
 
The interest rate is only part of the picture. Find out what all the closing costs are going to be-they have to give you a Good Faith Estimate in writing. Points and misc. bogus closing costs can very quickly add up.

As to where to find a lender, there are so many loan brokers out there these days it's hard not to trip over them. Just open the Yellow Pages and call a few. My internet experiences have been less satisfactory-too many try to rope you in before giving any meaningful information. They waste a lot of your time.
 
Originally posted by: Thump553
The interest rate is only part of the picture. Find out what all the closing costs are going to be-they have to give you a Good Faith Estimate in writing. Points and misc. bogus closing costs can very quickly add up.

As to where to find a lender, there are so many loan brokers out there these days it's hard not to trip over them. Just open the Yellow Pages and call a few. My internet experiences have been less satisfactory-too many try to rope you in before giving any meaningful information. They waste a lot of your time.
Click to expand...

Additional Fees:

Application Fee $50.00

Tax Service Fee $90.00

Underwriting Fee $370.00

Flood Certification $24.00

Appraisal Fee $275.00

Credit Report $15.00


Estimated Lender Fees: $824.00


Origination Fee $0.00

Discount Points $0.00


Total Estimated Closing Costs: $824.00
 
Not bad, but in 5 years you're not going to refinance for a better rate than 6.9% locked for 30 years.
 
Also, another thing to consider is the possibility of depreciating real estate value. I hear people say that an ARM is fine as long as you know you are going to be selling within the fixed portion of the loan. However, I think this is short-sighted if you intend to put down less than 20%, as many who take an ARM do. What if your property depreciates 15% and you find yourself upside down on the loan? You won't be able to sell w/o coming up with a chunk of cash. This could easily force you to stay put and endure the very situation you meant to avoid.

I say the smaller the down payment you have, the more you should seriously consider a fixed rate. Of course, the last couple of months have been brutal for those shopping for a good rate.
 
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