Mortgage Loan Question (fixed rate, interest, 2011, heloc)

[airics]

Ok, i have an arm.. doesnt change till 2011... based on wall street one year libor which is at 1.73 as of today... add 2.25 to the number for change... so lets say today was year 2011... the way i see it, the loan would be 3.98 rounded to 4%..
maximum throughout the 30yrs is 9%... until 2011, i'm at 5 3/8%

why would i consider a refinance? am i missing something? of course, if they come around with a 4% 30yr fixed with lmtd docs (assets only), then maybe i'll peek....

thoughts?

[Daddys///M3]

Originally Posted by airics

Ok, i have an arm.. doesnt change till 2011... based on wall street one year libor which is at 1.73 as of today... add 2.25 to the number for change... so lets say today was year 2011... the way i see it, the loan would be 3.98 rounded to 4%..
maximum throughout the 30yrs is 9%... until 2011, i'm at 5 3/8%

why would i consider a refinance? am i missing something? of course, if they come around with a 4% 30yr fixed with lmtd docs (assets only), then maybe i'll peek....

thoughts?

The security of a fixed rate loan is worth the cost in rate to some. I remember when I had a HELOC and the wife wanted to refi into a fixed second. The rate was higher and thusly the payment was more, she just felt a little safer in that it was fixed.

You're not going to be able to refi with limited or reduced doc findings anymore though. Over the next few years underwriting may get a little more lenient and some of these loan programs may come back, so waiting it out is not just the right move, it's the only move for you right now.

Watch that LIBOR index, the European particularly the English (it is the London Interbank Overnight Rate) economy is in just as much turmoil as American markets. That could make that index volatile.

[airics]

who knows maybe in 3 yrs, all adjustables will have been required to become fixed

[barryhussein]

It looks like a good loan. Can the rate actually decrease on the first adjusment?

[airics]

that is what i am wondering myself, can an arm decrease?

[barryhussein]

yes, but many that I have seen cannot possibly go down on the first adjustment.

[gulfer]

I must be reading this too much, because I immediately thought of what Daddy said. To me personally, the peace of mind that comes with a fixed is extremely important to me. With the way the credit markets are these days, with all this money coming into the economy from the government, etc... I think interest rates will HAVE to increase. If you use your payment today, then decide what your payment will be at 9%, see if you can afford the increase.
As mentioned, for peace of mind, I need the security to know that my mortgage rate isn't going to change my standard of living.

[airics]

ok reading further into my docs, the highest the loan can go on at each change is 2%, so i dont see this as being bad at all.... i have at least till 2011... i dont forsee the mortgage rates going up at all in the near future.... i still can see them coming down.. when 4% fixed hits, i might bite..

[olecapt]

Originally Posted by gulfer

I must be reading this too much, because I immediately thought of what Daddy said. To me personally, the peace of mind that comes with a fixed is extremely important to me. With the way the credit markets are these days, with all this money coming into the economy from the government, etc... I think interest rates will HAVE to increase. If you use your payment today, then decide what your payment will be at 9%, see if you can afford the increase.
As mentioned, for peace of mind, I need the security to know that my mortgage rate isn't going to change my standard of living.

Gulfer...my SIL took out a teaser option in 2002 when they moved to Portland OR. He lunched off that for three years and then jumped to a fixed rate...dialog with FIL convinced him that it was getting dangerous.

Probably saved cloes to $50K over the period.

He actually took little risk as he could have paid cash.

[chet everett]

The key factor is the LIKLIHOOD of refinancing being available at the TERMS that are acceptable.

As the OP seems to need a "no income verification" I would suspect that their tax returns DO NOT ACCURATELY reflect their true income. Lenders have had a light bulb go off over their heads and realize "jokers who willing defraud the US Treasury and commit a Federal Crime every April 15 probably are not the kind of people that we should TRUST with our money"...

Now if your income is VERIFIABLE, but not from salary, you would have almost no difficulty obtaining a fair rate.