Tips for buying a house........


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jag4life said:
I have asked you 2-3 times in this thread if you have ever seen an existing ARM adjust downward and you have not answered...so I took that as a no.

Have you ever heard of someone having an ARM and after a few years had the interest rate on THAT loan go down? I am not speaking of new loans...I am talking about an existing loan that someone had.
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After 25years of banking my partner said he has seen them hold steady
for a few years, but they always go up. HE NEVER SAW THEM GO DOWN>

So I asked again to make sure he said

"I've never seen someone's mortgage payment become cheaper, because
of a change in their ARM only an increase." damn!!!
 
jag4life said:
I have asked you 2-3 times in this thread if you have ever seen an existing ARM adjust downward and you have not answered...so I took that as a no.

Have you ever heard of someone having an ARM and after a few years had the interest rate on THAT loan go down? I am not speaking of new loans...I am talking about an existing loan that someone had.
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I thought I provided you a LINK to the LIBOR index and explained that you take the margin factor and add the current market value of the LIBOR index and that gives you your new interest rate. That rate could be HIGHER or LOWER than the current iRate of the ARM. I recall you asked if people who had ARMs in 2001 and 2002 saw a rate decline. My reply was not a YES or a NO. My reply was I recall talking to a loan officer at my credit union and I asked if the rate for loans that changed in that month was 3.5%. That meant that the rate could have INCREASE to 3.5% or decreased to 3.5%.

YES, rates go UP and DOWN in an ARM.
 

I just bought my second house and my main tip is to be sure to buy a house that you love. That is a big investment and you need to be happy making all those payments!

And of course, always buy in a location that will appreciate and give you a good resale value...I made GOOD off the sale of my first house, and if I sell my current house (just bought in March) today, I will make a profit. :banana:
 
Tony said:
After 25years of banking my partner said he has seen them hold steady
for a few years, but they always go up. HE NEVER SAW THEM GO DOWN>

So I asked again to make sure he said

"I've never seen someone's mortgage payment become cheaper, because
of a change in their ARM only an increase." damn!!!
Click to expand...

So, you are on both sides of the fence. Which is it? One post you say they can go up and down, then the other post you say the only go up. Proves you don't know what you are talking about.

Tony said:

The ARM, of course, is an adjustable-rate mortgage whose interest rate can go up or down. By contrast, a fixed-rate loan locks in your rate for the life of your loan -- there's no need to guess as to where the rate will be next year or in 15 or 30 years.
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Da_Sperm said:
So, you are on both sides of the fence. Which is it? One post you say they can go up and down, then the other post you say the only go up. Proves you don't know what you are talking about.
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The 2nd quote is from an article not from Tony speaking.
 
Da_Sperm said:
So, you are on both sides of the fence. Which is it? One post you say they can go up and down, then the other post you say the only go up. Proves you don't know what you are talking about.
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Theoretically/On paper, they can go down.

But myself & No one I know has ever seen that

Theoretically Pine Bluff can win a football title, but hell
No one has ever seen that!!!
 
Tony said:
Theoretically/On paper, they can go down.

But myself & No one I know has ever seen that

Theoretically Pine Bluff can win a football title, but hell
No one has ever seen that!!!
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Funny.

Serious question Sperm. Has your ARM ever adjusted downward? If so, when, how many times, and under what circumstances.
 
Here is PROOF that even with an ARM whose rate DOES NOT EVER GO DOWN after 10 years, you still owe less on your mortgage. Who cares what the interest rate is, it could be 1000%, but as long as you are paying LESS than a rate that is 1%, that is all that matters.

If you can't see that the stability of a fixed rate has you paying more for your home, then you have been had. If you are that type of person, then you also need to invest in CDs instead of high risk stocks and mutual funds.

Da_Sperm said:
30 Year Fixed rate mortgage at 7% interest w/ payment of $665.30. Loan after 10 years.
Year => Pricipal (payment)
2007 => 100,000 (payment is 665.30)
2012 => $94,015
2013 => $92,556
2014 => $91013
2015 => $89343
2016 => $87562
2017 => $85647


5/1 Year ARM mortgage at 5% for 5 years then increases 2% until the rate caps at 11% (6pts higher than the intitial rate). We will pay the same amount on this loan ($665.30/month) as we would the Fixed rate loan.

Year => Pricipal (payment)
2007 => 100,000 (payment is 536.82 at 5%)
2012 => $82966 = (payment is 586.39 at 7%)
2013 => $80510 = (payment is $683.00 at 9%) $18 more than the fixed
2014 => $78535 = (payment is 791.74 at 11%) $126.44 more than the 7% fixed
2015 => $77557 = (payment is 791.02 at 11%) $126.44 more than the 7% fixed
2016 => $76467 = (payment is 790.21 at 11%) $126.44 more than the 7% fixed
2017 => $75253 = (payment is 790.21 at 11%) $126.44 more than the 7% fixed

In this example, we compare the ARM vs the Fixd. We pay $665.30 on both loans from 2007 to 2012, the ARM is ahead. In year 2012, the ARM rate goes from 5% to 7%, then in 2013, the rate goes to 9%, and in 2014 the rate caps out at 11% and stays that way. We are force to pay a higher note right. WRONG!!!!!!!

Because we have 20% equity by going the ARM route, we get to DROP the PMI in year 2013 (about 1% of the original note or $100). We take that $100 and apply it to the note and now we are STILL ahead of the FIXED. So instead of paying $665 per month, we pay $775 in year 2013 and so forth. You can see in year 2017 with the Fixed, we don't have 20% equity in the house, so we are still paying PMI.

Year => Pricipal (payment)
2013 => $78314 = (payment is $691.80 at 9%, but we apply $73 toward the principle because we no longer pay PMI)
2014 => $77338 = (payment is 788.80 at 11%) $23 more than the 7% loan with PMI.
2015 => $76375 = (payment is 788.80 at 11%) $23 more than the 7% loan with PMI.
2016 => $75302 = (payment is 788.80 at 11%) $23 more than the 7% loan with PMI.
2017 => $74106 = (payment is 788.80 at 11%) $23 more than the 7% loan with PMI.

At then end of 10 years, we owe $85,657 on the 7% Fixed rate loan and we owe $74,106 on the ARM which has seen its WORST CASE as far as interest rate in concerned at 11%. We were forced to pay $23 more a month in year 2014 on the note because of this.

You guys are so stuck on getting a low fixed interest rate, you don't realize that you are PAYING MORE for a mortgage loan. I HOPE this example sheds some light on you.
Click to expand...
 
Da_Sperm said:
If you can't see that the stability of a fixed rate has you paying more for your home, then you have been had. If you are that type of person, then you also need to invest in CDs instead of high risk stocks and mutual funds.
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Right that's why I have CDs

Check Worldcom, Enron etc.

Now you can diversify to lower the risk

But there is no diversification associated with an ARM

You can never lower or eliminate the innate RISK of an ARM
 

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