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ARMs are part of my finantial planning. I have an ARM at 4.125 that resets in July 2012. My wife and I plan to downsize some or move when both kids are in college in 5 years. I just did another 7 yr ARM at 4.5% that will give me a couble years buffer. Based on our planning it would be crazy to do 30 yr which is over 5%. We have 50% equity in home so not a case where we can't afford our house.
What would happen if your rate resetted higher in 2012?
I really don't mean to be rude, but why did you get into a mortgage situation, especially one with an ARM when your husband was unemployed and you couldn't qualify for a conventional loan? That just sounds really risky to me, good market or not.
My husband lost his job a little over a year AFTER we moved here. He had a job before the entire family actually moved. So our family is not one of those that came without a job. He lived in our camper for 4 months while our house sold in MD so we did not have two mortgages. If it should be any explanation at all and if you read my many posts about this subject. Our two settlements overlapped which created a picture of two mortgages, yeah for 3 weeks. Our buyers in MD were difficult and decided to postpone settlement and if we did not settle here we would have lost the house. Hidesight I should have left the sucker go but for us to qualify we had to do the ARM. Little did I know my husband would be layed off the following November and it all went downhill from there. So not to be rude but I am not a complete moron and would even relocate with an unemployed family member more or less buy a house.
My husband lost his job a little over a year AFTER we moved here. He had a job before the entire family actually moved. So our family is not one of those that came without a job. He lived in our camper for 4 months while our house sold in MD so we did not have two mortgages. If it should be any explanation at all and if you read my many posts about this subject. Our two settlements overlapped which created a picture of two mortgages, yeah for 3 weeks. Our buyers in MD were difficult and decided to postpone settlement and if we did not settle here we would have lost the house. Hidesight I should have left the sucker go but for us to qualify we had to do the ARM. Little did I know my husband would be layed off the following November and it all went downhill from there. So not to be rude but I am not a complete moron and would even relocate with an unemployed family member more or less buy a house.
By the time you are my age, you have had all sorts of difficult situations to deal with - like what you outlined. All you can do is what seems the best at the time, based on what info you have at your disposal. No way you could know what would be down the line . . .
There are just times that things don't work out very well. At 35, I could never have imagined some of the things that I ended up dealing with in my 40s . . .
Life happens! With the economic crunch we are all dealing with right now, I suspect a large % of the folks in this country are gonna have some very unexpected (and complicated) situations to deal with in the next year or two.
Hopefully, we can all get thru/ this with just bruises - and no hemorrhages. I feel so awful when I find out what others are facing, cause having been thru/ tough times due to nothing I did "wrong" - I know the challenges.
I know there are folks in our region who can't sell their homes - and the reason are many and varied. Sometimes, it may appear to others looking from the outside that poor choices were made - when that is not what happened at all. I just hope we all can hang on til things turn around. It is truly sad when people are dealing with financial issues - regardless of WHY.
...we shouldn't be lynching everyone who took out an ARM. In some cases, an ARM was the right move for certain people.
I agree with you on this. Every situation is different. However, taking out an ARM has some level of risk, mitigated by a number of factors. Sometimes taking a risk can work to one's advantage; sometimes not. But its that roll of the dice...when it doesn't work out they way you intended or hoped, you can't start pointing fingers at everyone else (the banks, the assessors, the neighborhood, etc.) without also being willing to accept some responsibility on your part as well. You took a gamble and your horse didn't win this one. You need to accept it and move on as best as you can.
Quote:
Originally Posted by MikeyKid
Some very good people got absolutely hosed in this whole mess and ruined credit wise or worse, kicked out of their homes... They don't deserve to be lumped in with the miscreants. On the flip side, some people made out like bandits through this whole mess - specifically people who sold at the height and used the money wisely. Like many folks who sold in the NE and bought reasonably (not McMansions) in the Charlotte area.
This whole economic mess includes alot of "bad things happened to good people" anecdotes. And it sucks rocks and I feel for them. But I think the bottom line is that, as a whole, our country really took the keeping-up-with-the-Joneses concept to a new level. Too many people found ways to live outside of their means simply because they had access to methods of doing so. And in the end, it came back to bite us all in the butt. And for those of us who tried very hard to be "responsible", well...frankly we're a little pissed off about it all right now. And I think we have a right to be.
By the time you are my age, you have had all sorts of difficult situations to deal with - like what you outlined. All you can do is what seems the best at the time, based on what info you have at your disposal. No way you could know what would be down the line . . .
There are just times that things don't work out very well. At 35, I could never have imagined some of the things that I ended up dealing with in my 40s . . .
Life happens! With the economic crunch we are all dealing with right now, I suspect a large % of the folks in this country are gonna have some very unexpected (and complicated) situations to deal with in the next year or two.
Hopefully, we can all get thru/ this with just bruises - and no hemorrhages. I feel so awful when I find out what others are facing, cause having been thru/ tough times due to nothing I did "wrong" - I know the challenges.
I know there are folks in our region who can't sell their homes - and the reason are many and varied. Sometimes, it may appear to others looking from the outside that poor choices were made - when that is not what happened at all. I just hope we all can hang on til things turn around. It is truly sad when people are dealing with financial issues - regardless of WHY.
I have said this many times, Thank you Ani--unfortunately there are those on here who just happened to not have the unlucky hit like others did and like you said by no fault of their own. It is unfortunate that those who have not had the bad luck has to just be completely negative and believe everybody has problems because they were not smart enough to do the right thing. BTW, I am hanging very tight. We have already had three houses go to auction in our neighborhood and two short sales as well as two rental units but we are still hanging strong!!!
I have said this many times, Thank you Ani--unfortunately there are those on here who just happened to not have the unlucky hit like others did and like you said by no fault of their own. It is unfortunate that those who have not had the bad luck has to just be completely negative and believe everybody has problems because they were not smart enough to do the right thing. BTW, I am hanging very tight. We have already had three houses go to auction in our neighborhood and two short sales as well as two rental units but we are still hanging strong!!!
This economy is gonna start picking up soon. Credit is starting to flow again. I have been watching commercial real estate and am noticing some movement again. To me, that is a better indicator of the economy picking up than residential sales. I won't say I am feeling entirely optimistic - but I am feeling hopeful.
I have said this many times, Thank you Ani--unfortunately there are those on here who just happened to not have the unlucky hit like others did and like you said by no fault of their own. It is unfortunate that those who have not had the bad luck has to just be completely negative and believe everybody has problems because they were not smart enough to do the right thing. BTW, I am hanging very tight. We have already had three houses go to auction in our neighborhood and two short sales as well as two rental units but we are still hanging strong!!!
No one is being completely negative, that's just your interpretation. many people bought homes (w/I/O mortgages or liar loans), living paycheck to paycheck and had no savings in the bank in case of the breadwinner losing their job with nothing to fall back on. Overwhelming majority of people had the blinders on w/o a plan B.
That is not "bad luck" as you call it, personally that's an overused excuse. You make your own "luck" IMO. Poor financial planning was the reason here....
My point is that it may not be as crazy as you make it sound to pay a little more now, however you'll have the piece of mind that you won't be facing a steep rate jump in case things don't work out to your plan.
I know you've done the research, however you never know....something to think about (piece of mind)
If you got an ARM prior to the downturn and it resets, you should be paying next to nothing now. I'm eager for my ARM to reset since my APR will drop to about 2%!!
Now in the next 5 years they will start to be a problem, but certainly not now. If anything, it's the opposite - they're artificially low right now (unless the loan was set to increase to some ungodly percentage automatically regardless of prime).
Your last sentence hits the nail on the head in regards to answering your Why question. It depends upon the ARM. Many homeowners are shocked to find out their assumptions on how and how much these things will reset when it happens were completely wrong. This is especially true of ARMS that had a lot of discounting up front.
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