HELOC's and Foreclosure (fixed rate, credit, buying, rate)
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That is true. However, some people don't have a choice. Due to certain situations (credit score, or debt to income ratio) you may not be able to qualify for a reasonable fixed loan - or at all even. In this case an ARM is offered to give the borrower time to fix what ever the problem is and then refinance....even the bank knows that.
Do you know what an Option ARM is? It is where the minimum payment is so low that is does not even cover the interest! aka-negative amortization. example-you take out a $300k loan and after 5 years you owe $350k! There is NO ONE (other than the very finanacially savy who are doing other things with their money like investing wisely) who should be taking out Option ARMs. The OP did it on 3 properties! That is the kiss of death.
RoaminRed - your right - for most that is an option. Good point.
Is an Option ARM and ARM the same? Is there a difference? And what is HELOC?
I thought ARM was just ARM?
HELOC = Home Equity Line of Credit, and there's tons of people that got 'em when their house was valued high, took out the equity for one reason or another, and now are upside down because the value of the home has dropped but they still owe the money they took out for that new car, boat, pool, whatever.
I don't personally know the differences in ARMs because I've never considered using one.
RoaminRed - your right - for most that is an option. Good point.
Is an Option ARM and ARM the same? Is there a difference? And what is HELOC?
I thought ARM was just ARM?
huge difference.
Your loan balance goes UP every month as you make your payments on an Option ARM as the minimum payment is LESS THAN interest only. It is the loan you see the adds touting....1% rate or $900/mo. payment on $300k loan.
regular loan-you are paying down the principal a little bit each month
interest only-you pay only the interest so your loan balance stays the same
Option Arm-you pay less than interest only so your loan balance goes up every month
Your loan balance goes UP every month as you make your payments on an Option ARM as the minimum payment is LESS THAN interest only. It is the loan you see the adds touting....1% rate or $900/mo. payment on $300k loan.
regular loan-you are paying down the principal a little bit each month
interest only-you pay only the interest so your loan balance stays the same
Option Arm-you pay less than interest only so your loan balance goes up every month
No free toaster with them, either. Those loans are the ones that come with a complimentary robot waving his ARMs and yelling "Danger, danger!"
Last edited by RoaminRed; 01-31-2008 at 01:11 PM..
Reason: ...for humor
Sounds like an Option ARM is a dangerous product. Thank goodness I don't have that! I have a regular ARM - but its not going to reset for another couple of years.
Sounds like an Option ARM is a dangerous product. Thank goodness I don't have that! I have a regular ARM - but its not going to reset for another couple of years.
Oooh, should start looking now to see what kind of deal you can get with the rates being low and all
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