Mortgage Help

[kapkomet]

You can structure the loan (if you have the credit) however your heart desires. It's just how much risk you want to take. And yes, I'm being VERY vague on purpose.

[Chisoxfn]

You're giving advice with a very broad brush stroke.

Well, I'm on the other side of the spectrum in that I think interest only and ARM's are the only loans I'd really recommend. Only in rare circumstances would I recommend anything else because its so much cheaper and there is absolutely no reason to have money tied into your house (as far as I'm concerned).

 

But thats for the area I live in and maybe my recommendations aren't the best for other areas. I also think this 25-30% increase is not going to happen and I think a ton of people are over-reacting to a necessary downturn in the real estate market.

 

Its a cycle and a downturn is going to happen, but its not going to be like the crash of the late 80's early 90's (well at least how bad it was in Cali at that time).

[FlaSoxxJim]

I need mortgage help too.

 

 

Anyone want to help me pay my mortgage??!

 

[Steff]

Well, I'm on the other side of the spectrum in that I think interest only and ARM's are the only loans I'd really recommend. Only in rare circumstances would I recommend anything else because its so much cheaper and there is absolutely no reason to have money tied into your house (as far as I'm concerned).

 

But thats for the area I live in and maybe my recommendations aren't the best for other areas. I also think this 25-30% increase is not going to happen and I think a ton of people are over-reacting to a necessary downturn in the real estate market.

 

Its a cycle and a downturn is going to happen, but its not going to be like the crash of the late 80's early 90's (well at least how bad it was in Cali at that time).

 

 

 

I agree with you, moreso because of the investment property, and I know if I was the one asking I would appreciate the advice. I just didn't understand the hatred towards IOL's.. LOL.

[kapkomet]

Well, I'm on the other side of the spectrum in that I think interest only and ARM's are the only loans I'd really recommend. Only in rare circumstances would I recommend anything else because its so much cheaper and there is absolutely no reason to have money tied into your house (as far as I'm concerned).

 

But thats for the area I live in and maybe my recommendations aren't the best for other areas. I also think this 25-30% increase is not going to happen and I think a ton of people are over-reacting to a necessary downturn in the real estate market.

 

Its a cycle and a downturn is going to happen, but its not going to be like the crash of the late 80's early 90's (well at least how bad it was in Cali at that time).

I know you're going to be gone, but why were there so many refi's after 3 years on ARMs, and why are there so many foreclosures from people that were on ARMs?

 

You have to be really, really careful on these. That's all I'm saying. It's more riskier, but it can come with a good reward if you really do your research.

[Steff]

I know you're going to be gone, but why were there so many refi's after 3 years on ARMs, and why are there so many foreclosures from people that were on ARMs?

 

You have to be really, really careful on these. That's all I'm saying. It's more riskier, but it can come with a good reward if you really do your research.

 

 

 

Refi's cause the rates were still good, changed loans, took out equity. Foreclosures cause people were stupid and overspent on huge houses they didn't need - got screwed when the payments went up and the full tax amounts came due. If you stay within your means and plan ahead, an IOL makes it possible to have a LOT of extra disposable income.

[Chisoxfn]

I know you're going to be gone, but why were there so many refi's after 3 years on ARMs, and why are there so many foreclosures from people that were on ARMs?

 

You have to be really, really careful on these. That's all I'm saying. It's more riskier, but it can come with a good reward if you really do your research.

People don't refi arm's and go to fixed, they typically refi because they could get newer loans with better margin's or that they were refi'ing to again pull some cash out because there property had really appreciated.

 

I know of all the refi's we did, we weren't refi'ing people into fixed loans, they were going right back into ARM's.

 

I agree with you, moreso because of the investment property, and I know if I was the one asking I would appreciate the advice. I just didn't understand the hatred towards IOL's.. LOL.

I think investments in real estate are the best ways to invest. The stock market in my opinion is much more of a crapshoot, i almost consider it to playing poker, where if you are really really good you'll be able to win, but if you are mediocre well frankly its just a crapshoot (if your investing long term and in indexes and funds you may be alright).

 

In the case of real estate you actually own something, you arne't just there relying on accountants numbers and expectations. I really find it ridiculous that a companies stock will drop or take a hit when they make less then expected earnings (yet the company is still making a net profit) yet some other company is in its 5th or 6th year of constant losses, but people expect it to increase earnings and grow so the stock continues to skyrocket even though its not a successful company.

 

Real estate you own property, are able to get some tax benefits (if you spin things properly) and bottom line you are even able to get people to live in your house and help cover the expenses (ie leasing it) and best of all you have about 10% in on the investment so if/when it goes up (and long term they GO UP) you end up getting a nice return (for example CA historically is like 7%, but you are getting 7% on the purchase price while you only put down 10% so really your making a whole lot greater return than that).

 

And I have been brainwashed this stuff for years from my dad, so these opinions really aren't necessarily mine, rather what I've learned from working with my dad (whose been in the biz for 35+ years now) and a few other of my dads friends/agents that have been in the business for 30 plus years. These aren't just the noobs that come rolling out when the refi industry is strong (such as a lot of newer mortage brokers who are gonna realize and already are that it really isn't that easy to make money when the market is down) or when the market is strong (when any jackass real estate agent can sell a home).

[Rex Hudler]

A couple of random thoughts after reading this thread:

 

1. The rates being quoted here seem awfully high. Obviously, credit ratings/history will have an affect, but the average rate in Illinois for a 30-yr fixed mortgage today was 6.08%. It was 6.14 here in the Birmingham area.

 

2. The difference between the fixed rate and ARM's just isn't that great anymore. Compare the above 6.08 to 5.82 for a 5/1 ARM or 5.66 on a 3/1 ARM. Interest only ARM's for the same periods were slightly higher. When I bought my first house, fixed rates were around 6% and I got a 3/1ARM for 4.625%. To me that was a big enough difference in a starter home to go with the ARM. I can't see myself doing an ARM while saving less than 1/2%. To me that is not enough of a difference to take on that risk.

 

No one ever knows what will happen in the future. The housing market could go bust. One could lose a job, or take a new job earning less. Divorce is possible. Disability could happen. What if life changes enough to make you need to stay in the "starter" house for 10 years instead of the planned 3-5? One common mistake young people make is they assume they will always make more money and will always be moving up in the world so to speak. Real life shows us that is not always the case.

 

I did the ARM once and chose to go fixed the 2nd time. I would have done the ARM again in a heartbeat if the reward were worth the risk. I just don't see that being the case with the rates so close.

[BDavisFutureHOF]

Good thread at the perfect time -- my fiance and I found a place this past weekend and actually just started looking ino mortgages -- this has helped alot