Ok you'd have to pay 160.00 extra to get it to that amount. But the point is...the fixed rates do not have the unpredictability of the ARMs. The person buying might not want to or even have it pay that much extra over a 5 year period...or he might. His prerogative.
Tips for buying a house........
- Thread starter Devil's Gun Trigger Man
- Start date
- Status
Ok you'd have to pay 160.00 extra to get it to that amount. But the point is...the fixed rates do not have the unpredictability of the ARMs. The person buying might not want to or even have it pay that much extra over a 5 year period...or he might. His prerogative.
Da_Sperm
New Member
So, with a $100K loan, you agree that a fixed rate of 7%, you will pay $665, right. After 5 years, you would owe around $92K to $93K.
If you got a 5/1 ARM, and pay $665, after 5 years you would owe $82K.
What does it matter what the interest rate says, IF you owe $10K less for paying the same amount over the same amount of time? You just said, that with a FIXED rate loan, one would have to pay $160 more or $825 per month to have a balance of $82K after 5 years. Why throw away that money?
If you pay it you throw it away, if you don't pay it, you still throw it away because you owe $93K versus $82K.
This my brother, is what white folks don't do. They don't throw their money away. We don't realize how to play the game and we are getting played over and over again. We do this with mortgages, investments, loans, etc. We do this with businesses, education, and everything.
We need to have a creative mindset if we are going to be productive. If I'm selling you a loan, I will sell you a FIXED rate product because it will make more money for me. If I can about your financial situation, I will PRESENT you a ARM and show you how you can use it to your advantage.
Sperm... what about the folks who ended up having mortgages that were $200 more/month because they got ARMs? Those who could not afford it because of that?
You harp on folks trying to pay extra for whatever reason...but most folks do not have it to pay extra. They get a 30 year mortgage and pay the amount they are told to pay.
You harp on folks trying to pay extra for whatever reason...but most folks do not have it to pay extra. They get a 30 year mortgage and pay the amount they are told to pay.
Da_Sperm
New Member
Ron is one of the brightest financial minds out there. Go to him with an OPEN mind. He won't present you a refi product for just your house. He will present you a refi product for your overall budget.
Warndalyn
Postmaster General!!!
ok, thanks...:tup:
Da_Sperm
New Member
DAMN JAG, I have YET to say PAY EXTRA. In my example, I said get an ARM, pay the same amount on the ARM note as you would on the FIXED NOTE. $665 per month.
I repeat, if you can afford a FIXED, you are better off with an ARM.
Hey man, all it takes if for you to see your money go down the drain before you will open your eyes. FIXED loans are for people like you who want stability. I on the other hand, want more of my money in my pocket, so give me an ARM and I will make it work for me.
THis is So Wrong NO ONE Can predict the Future, presenting me with
an ARM that I might can't afford later on is Dirty, low down and dispectable.
If the rate drops later on I can refiance then into another lower FIXED Rate
NOT Your damn sneaky steady rising ARM.
You're gambling hoping the Rate doesn't go up.
Hoping your mortgage doesn't increase.
Just like stocks etc. etc.
Maybe_ Maybe not
Da_Sperm
New Member
Refi? An ARM is a FREE refi every year. You would rather pay $5K to $8K in closing cost to refi for a lower rate and not even REALIZE that you are doing nothing but the same as an ARM.
You are getting there TONY, just not all the way there.
Isn't that paying extra on the ARM???? :|
Da_Sperm
New Member
No, I know the rate is going UP. That is why I pay MORE on the note so that when the rate goes up and the note ADJUSTS, I'm still paying less P+I than I would on an ARM than a FIXED even though the rate on the ARM is higher than the rate on the FIXED.
I would never take a chance on having a 10.5% mortgage.
Da_Sperm
New Member
Yes... it is. You are paying EXTRA on the ARM, but you are paying the same amount on the mortgage as you would the FIXED. Either way, you are out $665 per month. At the end of 5 years, one you owe $82K, the other you owe $93K.
You're on a treadmill, you gotta keep watching that rate
& adjusting your pay accordingly. This means you're still paying
UP & Down Up & Down
Where as I can pay a fixed rate and also kick some money straight to principle.
It's the Same thing money wise except for the fact, that what I'm required to pay each month will never change through out the loan
Shamocha
Deserving Of Everything
Dang I had to read that a couple of times but I finally got what you were saying Sperm. I see what you're saying. If you can afford to do a fixed rate then an ARM works out better because you are making your money go further. The problem is that most folks that get an ARM can't afford a fixed rate and that's why they got the ARM in the 1st place. But you have definitely presented making an ARM work for you. I never really thought about it that way. I'm still just a little leary about rates rising on you.
THAT'S IT!!!! Right there ARMS never go down!!!!!!
But dude most folks get ARMs because they can only afford that amount...so they don't pay the extra amount because they can only afford the ARM amount. When that ARM changes, they are screwed.
That's a reason why folks should be sure they can afford a house in the first place.
They will Rise
ALPHA3
Active Member
I'll agree with you on that. Those things are based on best estimates and sometimes they are wrong.
That's Real
100% correct ARMs were only invented to help
financially challenged people buy a house.
I'm all ready strapped, then you gonna switch the game up
on me later on :xeye:
Might as well do a home assumption then, if you don't mind
what your rate is.
Shamocha
Deserving Of Everything
I know that. The fear is...by how much? If you're used to paying more than your mortgage is and your payment rises to what you have been paying the whole time then that's fine. I just would hate to be like these folks losing their houses because they didn't realize how much their payments would increase. If all that is spelled out in the original contract that would be great. The way Sperm spelled it out, you could figure out how much your potential payment would be if it were to adjust to a higher rate. I've never seen a contract so I don't know what it spells out.
No you'd have to figure that out on your own probably by using MS Excel.
ALPHA3
Active Member
You never know it's based the economy of the country.
- Status