need loan comparison help
Question: I am planning to refinance my 1 year ARM (min rate 8.375 with 6 point cap margin is 2.75). I am paying 8.375 and expect to pay 10.xx starting March 1st. I recently found about the true terms of my loan and I know this is not the best time to refinance but I would appreciate your help in deciding if refinancing is the best option for me.
Also, we plan to stay in our house for the next 3 years. We are in our 5th year of the mortgage loan. I need to know how to calculate the interest and principal for the two loans (current and the refinanced loan) so I can decide if refinancing is a good financial decision. I will ofcourse look for an ARM that is less than or equal to 8.375 but I understand that you pay more principal as the years go by and I need to know how this will affect me if I refinance.
I would also appreciate any recommendations about mortgage companies in the Wahington Metro area.
thanks very much,
Answer: I am a mortgage broker, but do not pretend to know everything. There is no doubt in my mind that any adjustable or fixed in today’s market is better than a 10% loan. For comparison, a bank will offer a 10% adjustable to a B-paper client: with the bad credit history, late mortgage payments, etc. If you could find a no-negative COFI based loan, count youself lucky. COFI index is still very low, compared to the rest of them, but most COFI based loans have negative amortization. By the time COFI cathes up with, you will be ready to move out. And it is not true that all of them require 2 points, at least not in Clofornia. Most consumers don’t understand that the last person they should talk to about buying real estate is a real estate agent who has a vested interest in the purchase of any home. Consumers are best served if they contact a lending institution, submit the necessary paperwork to get a lending commitment, and then ask that lender to act as their fiduciary. Absolutely imperative the consumer keep his income, assets, liabilities, motivations, and emotional attachments to property to himself. Agents generally have no idea what to do to represent a buyer and, as a result, compromise the buyer’s negotiating position purposefully or inadvertently. Don’t go to a lender recommended by the real estate agent. He’s working for the agent, not you.
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