Homeowner w/resetting ARM; need help/advice (loan, fixed rate, interest)
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Looking for advice from all the good people here. Here's the situation...
Family very close to me has a no doc (liar) loan. Monthly payments will increase 45% ($800) in SEPTEMBER of this year. Like many, they will not be able to keep their head above water after the rate jump. They've been current for 2 years now. Do not have much in terms of cc debt but obv don't want that to increase....
My question is what are all their options to handle the upcoming crisis? I'm thinking work w/the bank NOW. Maybe change to a fixed w/an increased payment of say $300/month?.....from reading everything online, I'd assume it would be difficult to get the bank to this, but it would be a win-win for everyone involved....
I don't work IN the industry, but looking for help for them..
Anyone have any other suggestions what they can do now? thanks
Have them talk to a good lender/broker (best if it's all in one) to see which programs would work best for them. If they have an amortizing ARM then an amortizing fixed loan won't be much of a stretch: everything depends on how low their interest rate is currently. Refinancing will work as long as they have equity in the place and or have money for closing costs.
I believe they only put a couple percent down (if that at all)... I didn't get into too many details but will ask more questions very soon. They would prob have to scrape up closing costs w/help from family members.
On some refi's you can roll the closing costs into the loan. I'd only do that if the rate was very good and they plan on staying in the house for a long time. A simple refi could work and probably be their best bet. As Mike suggested they need to find a good mortgage broker that works w/ several banks and programs that can find the best thing for them. They can go ahead NOW and get all of their financials in order and turn them in to the mortgage broker, get the house appraised, etc and be ready to jump anyday that the rates drop low. If the mortgage broker is on top of their game they will watch this for them and will advice them to go ahead and get all doc's turned in and ready to pounce on a low rate. No need to wait till the last minute to refi.
Looking for advice from all the good people here. Here's the situation...
My question is what are all their options to handle the upcoming crisis? I'm thinking work w/the bank NOW. Maybe change to a fixed w/an increased payment of say $300/month?.....from reading everything online, I'd assume it would be difficult to get the bank to this, but it would be a win-win for everyone involved....
thanks
Working with the bank now is a good idea, and possibly the best one. I know that many banks are proactively contacting mortgagees with upcoming resets, offering to refinance at a fixed rate which will be higher then the current but lower than the reset. Make the phone call, they'll probably be happy to work with your friends now, to avoid complications later.
Working with the bank now is a good idea, and possibly the best one. I know that many banks are proactively contacting mortgagees with upcoming resets, offering to refinance at a fixed rate which will be higher then the current but lower than the reset. Make the phone call, they'll probably be happy to work with your friends now, to avoid complications later.
Thanks Bill. Its family. I WANT to help but I'm walking a fine line because I don't want to but in more than I should......but they are facing big trouble if they don't act somehow....
sept. is right aroubd the corner,,,,,i would definitly start by working with their bank, but I would not wait around for an answer.......start shopping it around to everyone....it doesn't hurt..............good luck
So, the consensus would be to find a broker before trying to deal direct w/the current lender/bank? Is that correct?
What would be the best way to find a "good" broker in the Charlotte area?
I'd still throw the ball to the current mortgage holder (the bank that has it now). See what they pony up too. If they don't pony up any good options then I'd find a good mortgage broker to work with. Just don't wait too long to find a broker if the bank is not going to give a decent deal. And don't wait to contact the bank either. Do it this week and that way they can be ready to pull the trigger if and when the rates drop.
Are they able to document their income now?
Here in Charlotte we have been having home appreciation so I'm sure they have equity in the home.
They are also able to do a 'rate modification' if the lender will do it.
This will freeze their rates as is into a 30yr fixed.
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