Re: Ask Anything About Mortgages
 

People who are on the edge financially and get Adjustable Rate Mortgages are idiots aren't they?

People who refinance so they can get more money to spend on other things are idiots aren't they?

If I were to inherit enough money to pay off my mortgage and have total piece-of-mind, should I do that or invest elsewhere?

Why does it take 100+ signatures to close on a house? My hand hurt after that ordeal.

BB

Re: Ask Anything About Mortgages
 

How far into a loan life should I look to refinance? I just bought a house with an 80/20, and would like to refi to get rid of the 20% loan (which of course is at a higher rate). Do I need to wait 5 years, or is it something that could be done in 2 years or so?

Re: Ask Anything About Mortgages
 

- Small loan (~$135K)
- High rate (7.75, don't ask)
- The plan is to sell the house next year, but no earlier than the spring, as we will be making some repairs/upgrades

Recommendations for refinancing in the meantime? Grin and bear it?

Re: Ask Anything About Mortgages
 

[ QUOTE ]
Can you explain a balloon Mortgage to me? My broker lied to us (BIG SURPRISE0 and said we weren't in one until the closing attorney brought it up. Too late for is, as we had sold our house the previous day. Wht is the best way out of one? Thanks

[/ QUOTE ]


Basically, a balloon mortgage is a mortgage where you are paying either interest only or sometimes LESS than the monthly interest due.

All this means is that at some point (1 year, 5 years, or even 30 years)... you are going to have to "catch-up".

Now, some loans consider "catching-up" just a matter of paying all the interest due... or, in some extreme cases, paying off the whole loan.

2 examples I can think of...

Scenario 1: (more common)

You have a negative ammortization loan (meaning your monthly payment of lets say $1,200 doesn't even cover your total monthly interest due of $1,400)...

That means that every month you are tacking on $200 to your mortgage balance. The loan will have a provision where-as you either have to payoff that deferred interest all at once (usually yearly or every 5 years) -OR- at the 5 year mark your payments will start to increase dramatically ... the bank basically gave you 5 years of low payments but now they want you to start paying down that deferred interest AND pricinipal.

Scenario 2: (a true Balloon payment)

You paid either a negative payment, interest only, or principal an interest (per loan terms)... and at the end of a particular time (5 years, 10 yrs, or 30 years)... you owe the WHOLE balance of you loan. Usually, unless you have several hundred grand laying around, this means you need to refinance.


I'm guessing since you are selling the house, you probably just found out about deferred interest that you owe... i.e the balance of your mortgage is more than the day you got it... does this sound about right?

Re: Ask Anything About Mortgages
 

BB,

Are you still handing out no doc stated income ARMs like candy or have your loan buyers started cracking down on that sort of thing?

J

Re: Ask Anything About Mortgages
 

[ QUOTE ]
- Small loan (~$135K)
- High rate (7.75, don't ask)
- The plan is to sell the house next year, but no earlier than the spring, as we will be making some repairs/upgrades

Recommendations for refinancing in the meantime? Grin and bear it?

[/ QUOTE ]

Grin and bear it... one thing people don't factor in enough is closing costs.

The lowest you are going to find is $1500 - $2500 in costs (or the equivalent added to your rate)...

You will not make these costs up in one years time.

The normal break even point for closing cost / paying points for a lower rate is about 30 months.

Re: Ask Anything About Mortgages
 

[ QUOTE ]
BB,

Are you still handing out no doc stated income ARMs like candy or have your loan buyers started cracking down on that sort of thing?

J

[/ QUOTE ]

Guidelines have tightened a bit... luckily I work for a pretty conservative lender that didn't go to crazy. However, the OTS and SEC are starting to get involved.

Countrywide... per the WSJ and my own info... is the one that is going to be hurting the most.

Their portfolio section of loans are a little shaky and have a national leading average of 4% lates / defaults. That's HUGE. They have already closed down / investigated several of the top producing offices in SoCAL.

I'll answer all questions when I get back from lunch... keep posting.. I'll be back in an hour.

Re: Ask Anything About Mortgages
 

Hey,

Could you go through some of these questions?

(1) What strategy would you take to find the best deal on a mortgage possible?

(2) What specific b.s. fees should we look for to avoid?

Basically, if you needed a mortgage to buy a first-time home, where would you go that would cost you the least money overall, or what would you do to accomplish this?

Re: Ask Anything About Mortgages
 

[ QUOTE ]
[ QUOTE ]
Can you explain a balloon Mortgage to me? My broker lied to us (BIG SURPRISE0 and said we weren't in one until the closing attorney brought it up. Too late for is, as we had sold our house the previous day. Wht is the best way out of one? Thanks

[/ QUOTE ]


Basically, a balloon mortgage is a mortgage where you are paying either interest only or sometimes LESS than the monthly interest due.

All this means is that at some point (1 year, 5 years, or even 30 years)... you are going to have to "catch-up".

Now, some loans consider "catching-up" just a matter of paying all the interest due... or, in some extreme cases, paying off the whole loan.

2 examples I can think of...

Scenario 1: (more common)

You have a negative ammortization loan (meaning your monthly payment of lets say $1,200 doesn't even cover your total monthly interest due of $1,400)...

That means that every month you are tacking on $200 to your mortgage balance. The loan will have a provision where-as you either have to payoff that deferred interest all at once (usually yearly or every 5 years) -OR- at the 5 year mark your payments will start to increase dramatically ... the bank basically gave you 5 years of low payments but now they want you to start paying down that deferred interest AND pricinipal.

Scenario 2: (a true Balloon payment)

You paid either a negative payment, interest only, or principal an interest (per loan terms)... and at the end of a particular time (5 years, 10 yrs, or 30 years)... you owe the WHOLE balance of you loan. Usually, unless you have several hundred grand laying around, this means you need to refinance.


I'm guessing since you are selling the house, you probably just found out about deferred interest that you owe... i.e the balance of your mortgage is more than the day you got it... does this sound about right?

[/ QUOTE ]


No, we sold a townhouse. Nothing wrong on that. Its when we bought our new home. We have an 80/20 loan. The balllon is on the "20" loan, and we were told that it was a fixed rate loan. Well, at closing the attorney said that the "20" loan was a balloon.

Re: Ask Anything About Mortgages
 

WAP,

You should:

1. Immediately refinance, rolling all costs into the new loan amount.
2. Have it appraised at a higher value than what you paid and take the difference in cost.
3. Ask the broker about 3 year ARMs and interest only options cause you can just refi again when it goes up in value.

Holla,

J