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Old 05-09-2007, 03:28 PM
 
Location: Monterey Bay, California -- watching the sea lions, whales and otters! :D
1,906 posts, read 6,125,417 times
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I was one of those who got into a 5-year ARM and now I have to refi. It really doesn't need to be done until next February (2008), however, I am going through the process now and don't know if I should hold off or not.

I was pretty dismayed to see the total of "Initial Fees, commissions, costs and expenses" coming out to $8,469! Whoa, didn't expect that.

The loan amount is a combination of things: 1) first mortage: $196,00; 2) equity loan (for new septic) of $23,000; 3) and Student loan/payoff debt of $16,300, which according to the broker will give me a new mortgage of $245,000. The 7/1 ARM is because I plan to move by the end of it, as I do not think I can manage the upkeep on the house seven years from now on my own (way too much property, two buildings, trees, and just too much work for me alone and by then my daughter will be through college), and I will be able to retire and also get Social Security.

Is 5.875% standard now, or should I wait another 6 months -- do you think rates will go down?? (I realize it's hard to speculate, but your feeling on it.)

Obviously, I'm not listing everything, but it gives a general ballpark figure. My credit score is 804.

Any feedback is appreciated, as I am still a novice at this, I don't even know the right questions to ask, and I am a single woman in California. Thanks!
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Old 05-09-2007, 05:07 PM
 
Location: NW Atlanta
1,372 posts, read 4,756,548 times
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Quote:
Originally Posted by Wisteria View Post
I was one of those who got into a 5-year ARM and now I have to refi. It really doesn't need to be done until next February (2008), however, I am going through the process now and don't know if I should hold off or not.

I was pretty dismayed to see the total of "Initial Fees, commissions, costs and expenses" coming out to $8,469! Whoa, didn't expect that.

The loan amount is a combination of things: 1) first mortage: $196,00; 2) equity loan (for new septic) of $23,000; 3) and Student loan/payoff debt of $16,300, which according to the broker will give me a new mortgage of $245,000. The 7/1 ARM is because I plan to move by the end of it, as I do not think I can manage the upkeep on the house seven years from now on my own (way too much property, two buildings, trees, and just too much work for me alone and by then my daughter will be through college), and I will be able to retire and also get Social Security.

Is 5.875% standard now, or should I wait another 6 months -- do you think rates will go down?? (I realize it's hard to speculate, but your feeling on it.)

Obviously, I'm not listing everything, but it gives a general ballpark figure. My credit score is 804.

Any feedback is appreciated, as I am still a novice at this, I don't even know the right questions to ask, and I am a single woman in California. Thanks!
wisteria I don't think it wise to go for an ARM especially with your credit score. I wish mine were near as good
You can get a fixed rate mortgage it may be a little higher right now but do you fully understand what a 7/1 ARM is??

it means during the life of your mortgage that your interest rate can go up or down up to 7% but not more than 1% each year 7/1

so in 7 yrs from now in all likelyhood you COULD be paying on a mortgage at 12.85% WOW Honey is that what you were looking for???

Please go for a fixed rate loan
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Old 05-09-2007, 05:26 PM
 
Location: NW Las Vegas - Lone Mountain
15,756 posts, read 32,491,985 times
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Quote:
Originally Posted by dncngrl1964 View Post
wisteria I don't think it wise to go for an ARM especially with your credit score. I wish mine were near as good
You can get a fixed rate mortgage it may be a little higher right now but do you fully understand what a 7/1 ARM is??

it means during the life of your mortgage that your interest rate can go up or down up to 7% but not more than 1% each year 7/1

so in 7 yrs from now in all likelyhood you COULD be paying on a mortgage at 12.85% WOW Honey is that what you were looking for???

Please go for a fixed rate loan
Totally and ridiculously incorrect. A 7/1 is a loan fixed for seven years. Interest rate can't change until the eighth year.

Front end costs sound high. Shop it around to a few places including a couple of conventional banks. People with 800 ficos can often get very nice terms from the mainline banks. 8K in closing costs is very high.

Nothing wrong with you using such a loan as long as you are very sure you will be out of there inside of 7 years.
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Old 05-09-2007, 05:33 PM
 
Location: Maple Valley, WA
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Quote:
it means during the life of your mortgage that your interest rate can go up or down up to 7% but not more than 1% each year 7/1
The interest rate is fixed for 7 years, then it's adjusted every year after that. What you're describing is different from what I'm thinking. What am I missing something here?

8K in closing is pretty high, IMHO. You could probably do better. I'm not really a fan of ARM loans, but I think this would be a good idea for you, as long as you're out of there before 7 years.
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Old 05-09-2007, 05:36 PM
 
Location: Maple Valley, WA
980 posts, read 2,956,415 times
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Quote:
Totally and ridiculously incorrect. A 7/1 is a loan fixed for seven years. Interest rate can't change until the eighth year.

Front end costs sound high. Shop it around to a few places including a couple of conventional banks. People with 800 ficos can often get very nice terms from the mainline banks. 8K in closing costs is very high.

Nothing wrong with you using such a loan as long as you are very sure you will be out of there inside of 7 years.
I promise I wasn't copying you.....
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Old 05-09-2007, 05:44 PM
 
Location: NW Atlanta
1,372 posts, read 4,756,548 times
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Quote:
Originally Posted by olecapt View Post
Totally and ridiculously incorrect. A 7/1 is a loan fixed for seven years. Interest rate can't change until the eighth year.

Front end costs sound high. Shop it around to a few places including a couple of conventional banks. People with 800 ficos can often get very nice terms from the mainline banks. 8K in closing costs is very high.

Nothing wrong with you using such a loan as long as you are very sure you will be out of there inside of 7 years.
you are absolutely correct I don't know where my brain was If she can get out of it in 7 yrs that's great I also agree the CCs are too high maybe she can get them rolled into the new mortgage
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Old 05-09-2007, 05:54 PM
 
Location: Maple Valley, WA
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Quote:
I also agree the CCs are too high maybe she can get them rolled into the new mortgage
Do closing costs usually come out of the equity on the property? Just asking - I'm a student - Wisteria, don't mean to hijack your thread
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Old 05-09-2007, 06:46 PM
 
Location: NW Atlanta
1,372 posts, read 4,756,548 times
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Quote:
Originally Posted by mrsengle View Post
Do closing costs usually come out of the equity on the property? Just asking - I'm a student - Wisteria, don't mean to hijack your thread
In a refinance you can if you have equity take out the money to cover the closing costs so there is none out of pocket
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Old 05-09-2007, 07:33 PM
 
Location: Monterey Bay, California -- watching the sea lions, whales and otters! :D
1,906 posts, read 6,125,417 times
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Thanks, everyone. I have to go through the info again -- the broker -- a trusted one from many people at work who have used her, and she is married to a person in our department, so I feel okay about it -- however, those costs kind of threw me. I'll have to write down what they are all for -- however, they WERE good faith terms (in pencil). (I did notice that the broker's fees were a little over $4,000, so I guess that's half of it! )

I also have the option of Interest only payments (considering I'm a single parent and the only income provider), which I am considering doing for a year or two until my daughter is through her first year of college, and then paying more on the principal. The way I see it, I will not EVER be able to pay this house off, so I started thinking, why should I spend an extra $4,000 or more a year for principal, when I could use that?? If I have extra, or our union gets us a good raise, then I can still put it toward the principal. I'm not sure that is wise or not (to pay interest only for a few years if I will be moving eventually) -- I am so confused.

But yes, you are correct, it is fixed for seven years, and then is adjustable. I could get a thirty year, but since I already know it is too much property for me to care for later, and on my own, it doesn't make sense to keep it. I'd probably relocate to another warm area, but cheaper, and then when I sell the house, I'd have something to actually give me much lower (or no) payments elsewhere.

I think the broker said that I wouldn't have any out-of-pocket costs and that they would even waive the appraiser's fees -- does that make sense? Since I have to get back to her in a few days, I'm not sure even what I should be asking her. I'm not sure how they do those closing costs - maybe it is from equity. I have no idea what the house will be appraised for since the housing market tipped, but my guess is no lower than $340,000, and probably more like $400,000 or so....just a guess and I could be off, but houses nearby are going for around that. (So, yes, I'd still have equity.) Right now, as a single parent, I'm just glad to even own a house! I just need to keep my expenses low enough to survive until I get my daughter through college and then I can relocate.

I'm so confused right now. I don't want to get caught if rates go up next year, yet at the same time, I'm not sure if I should be doing this now or waiting......

I'd love to hear more feedback because I'm learning, too! Thanks so much!
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Old 05-09-2007, 11:11 PM
 
Location: Montana
2,203 posts, read 8,224,324 times
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$8,000+ in closing costs on a loan balance of $245k and a credit score of 800+ sounds really, really high. Any time you do a cash-out re-fi you'll get hit with either a higher interest rate (than on a new loan) or higher fees. The lender makes their money either on the interest rate or on the fees.

I don't think there's an issue with doing a 7/1 ARM, especially if you're trying to keep your payments as low as possible for several years. Another option might be to borrow a little more to cover the college costs, etc. Sometimes loans for lower amounts have higher fees and rates associated with them than loans for more $$.

If it were me, personally, I'd still check a couple of other lenders and get their rates and fees. Tell them not to pull your credit (since everytime someone does, it "dings" your score), but do have them provide you with a Good Faith Estimate. It's your money, so do some checking. If everybody else is higher, then you're reassured you're getting a good deal. If somebody else can do better, you can always go back to your first choice and ask her to match the better deal. The fees aren't written in stone - they're negotiable.

Hope you get a smokin' deal! With a great credit score like yours, you deserve it!
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