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Old 01-31-2008, 11:53 AM
 
5,340 posts, read 14,106,022 times
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Quote:
Originally Posted by nic529 View Post
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.

WAY BETTER TO RENT THAN TAKE OUT AN OPTION ARM!!
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Old 01-31-2008, 12:09 PM
 
Location: Burlington County NJ
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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?
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Old 01-31-2008, 12:17 PM
 
Location: Oz
2,238 posts, read 9,743,023 times
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Quote:
Originally Posted by nic529 View Post
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.
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Old 01-31-2008, 12:20 PM
 
Location: Burlington County NJ
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LOL - DUH! I can't believe I didn't get that!
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Old 01-31-2008, 12:27 PM
 
Location: Oz
2,238 posts, read 9,743,023 times
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Quote:
Originally Posted by nic529 View Post
LOL - DUH! I can't believe I didn't get that!
We all have our DUH moments every day. Mine was this morning, as I sat at the stop sign, waiting for it to turn green. Yes, the stop SIGN.
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Old 01-31-2008, 12:30 PM
 
Location: Burlington County NJ
1,969 posts, read 5,950,079 times
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LMBO - that is tooo funny
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Old 01-31-2008, 12:59 PM
 
5,340 posts, read 14,106,022 times
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Quote:
Originally Posted by nic529 View Post
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
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Old 01-31-2008, 01:03 PM
 
Location: Oz
2,238 posts, read 9,743,023 times
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Quote:
Originally Posted by TimtheGuy View Post
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
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
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Old 01-31-2008, 01:07 PM
 
Location: Burlington County NJ
1,969 posts, read 5,950,079 times
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LOL - I see thanks for clearing that up.

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.
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Old 01-31-2008, 01:12 PM
 
Location: Oz
2,238 posts, read 9,743,023 times
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Quote:
Originally Posted by nic529 View Post
LOL - I see thanks for clearing that up.

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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