Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Like I said earlier.. you can't mention particular people.. but the loan officer has a lot to do with it... and a buyer should have a buyer's agent to point out these things to a 1st time home buyer. Sorry wrxsti04 had a bad experience. It's not the company, it is the person who didn't care a thing about your situation or care to explain to you about mortgages. (All they cared about was their commission in your instance).
I actually had a real estate agent, his interest was me getting the place. Most real estate agents are not knowledgeable in mortgages and barely knowledgeable about homes. I had one tell me its good to pay closing cost (what a joke!). So the real estate agent is on commission and so is the mortgage broker. Neither care about you and both aimed at making $ from commissions. Quite sad if you ask me. I now use real estate agents within our family, someone I can trust and won't screw me.
I forgot to add: try SECU if you are a member. They have my car loan and are at awesome interest rates and super easy to work with
Also if you don't listen to Dave Ramsey, i'd start and get on the debt snowball
Two years ago you couldn't get 5.5 and I'd refinance now if we weren't moving in a year.
We could afford triple our mortgage rate right now as we have very little debt so if it went up we'd just refinance. If you are someone who lives paycheck to paycheck an adjustable probably wouldn't be a good idea. To pass it off as a bad idea for every situation is wrong on your part.
I would say it is a bad idea for the overwhelming majority of people. By the way, I did get a mortage 2.5 years ago for 5.65%. You say you would just refinance, but what if the equity was not there for someone at the time the wanted to refinance? What if the rates were higher when someone wanted to refinance? How much will someone have to pay to refinance and wouldn't that make the original rate actually be higher in the end?
Play it safe, do your research and you will find a great rate that is fixed and sleep well at night.
I would say it is a bad idea for the overwhelming majority of people. By the way, I did get a mortage 2.5 years ago for 5.65%. You say you would just refinance, but what if the equity was not there for someone at the time the wanted to refinance? What if the rates were higher when someone wanted to refinance? How much will someone have to pay to refinance and wouldn't that make the original rate actually be higher in the end?
Play it safe, do your research and you will find a great rate that is fixed and sleep well at night.
Again, it all depends on your financial state. All of your "worst case" scenario's really wouldn't effect me much.
Your advise would cost me thousands in interest. I'll sleep well at night by not losing money I would have with a fixed.
Hmmm. I have an 7 year arm I got two years ago and my rate is 5%. We knew we'd be moving within 5 years so a 30 year fixed would be wasting money.
I'm not losing my house and I'm saving money. The people losing houses are more likely those with interest only loans.
People need to do their own research, blanket statements like yours are not true in many cases.
Blanket statements are bad.... including "people losing houses are more likely those with interest only loans".
All of these loan types can be beneficial. The problem is that they need to be explained thoroughly and used properly. Interest Only is great for those that want to maximize their tax benefit and use the increased cash flow to pay off other debts or invest. They are NOT for the average first time homebuyer in a low tax bracket that wants payment security.
Its a matter of suitablity and financial strategy. This hits on what the OP is asking... look for a mortgage consultant that is willing to sit with you and explain pros and cons of any program. Tossing out blanket statements or making recommendations without knowing your needs is how people lose homes. People bought too much house, chose the wrong product for their situation or were not explained the pros/cons of a program.
The bank/broker you chose is less important than the person as was mentioned. You can go to 3 people at any company and find vast differences in the customer service. Ask your friends, family and coworkers (or here) for recommendations and then interview the person. Do not just ask for a rate/term but ask about their experience, philosophy and process.
Its the same you would do (hopefully) when you pick a financial planner, attorney, contractor or any other professional. Price is important but should not be the only factor in the decision. Especially on Construction to Permanent that is a specialized product and requires more knowledge than a simple 30-year fixed purchase.
Get a 15 year (or less) fixed rate mortgage that is 25% or less of your take home income. If you have at least 20% down, you can get a loan just about anywhere you want it. Don't let anyone "trick" you into a bad loan. Read the loan documents before you sign them.
Blanket statements are bad.... including "people losing houses are more likely those with interest only loans".
All of these loan types can be beneficial. The problem is that they need to be explained thoroughly and used properly. Interest Only is great for those that want to maximize their tax benefit and use the increased cash flow to pay off other debts or invest. They are NOT for the average first time homebuyer in a low tax bracket that wants payment security.
Its a matter of suitablity and financial strategy. This hits on what the OP is asking... look for a mortgage consultant that is willing to sit with you and explain pros and cons of any program. Tossing out blanket statements or making recommendations without knowing your needs is how people lose homes. People bought too much house, chose the wrong product for their situation or were not explained the pros/cons of a program.
The bank/broker you chose is less important than the person as was mentioned. You can go to 3 people at any company and find vast differences in the customer service. Ask your friends, family and coworkers (or here) for recommendations and then interview the person. Do not just ask for a rate/term but ask about their experience, philosophy and process.
Its the same you would do (hopefully) when you pick a financial planner, attorney, contractor or any other professional. Price is important but should not be the only factor in the decision. Especially on Construction to Permanent that is a specialized product and requires more knowledge than a simple 30-year fixed purchase.
I wasn't passing my statement off as fact. Interest only are a little more volatile compared to an ARM for people who don't have a lot of money. I'd actually like to know what kind of loans are being foreclosed on more.
I wasn't passing my statement off as fact. Interest only are a little more volatile compared to an ARM for people who don't have a lot of money. I'd actually like to know what kind of loans are being foreclosed on more.
Interest Only fixed rate loans are actually pretty stable. The only downside is when you intend to sell you still owe as much as you paid for it. So if you didnt save the difference or invest it wisely it can be harder to sell. Not that you get a lot of principle reduction in the first years anyways....
From all the reports and personal experience the #1 factor in foreclosures.... stated income that was flat out fraud. Many analysis have shown that credit is not the best predictor of who will repay their loans, debt-to-income is, followed by savings. It does not matter if you have 600 or 800 credit score, if you don't make enough money to pay your bills or have an emergency fund you are asking for trouble.
That is why FHA does not have a minmum credit score requirement. They look at income, debts, assets, job stability AND credit to determine if someone can pay the home. Its common sense underwriting.
Behind stated income the riskiest loan type I think is the Option ARM. Its great if used properly, but most people got an Option ARM for the same reason they went stated income... they couldn't qualify at the fully indexed rate with their income.
Its been shown that most non-conforming ARM loans were behind before they rate ever adjusted. The problem is people bought too much house expecting that home prices would keep going up and they could refi or sell.
Behind stated income the riskiest loan type I think is the Option ARM. Its great if used properly, but most people got an Option ARM for the same reason they went stated income... they couldn't qualify at the fully indexed rate with their income.
I am also looking for a construction to perm mortgage. Wachovia was recommended to me, so far the rates look good.
Anyone have a good suggestion please PM me.
Interest Only fixed rate loans are actually pretty stable. The only downside is when you intend to sell you still owe as much as you paid for it. So if you didnt save the difference or invest it wisely it can be harder to sell. Not that you get a lot of principle reduction in the first years anyways....
From all the reports and personal experience the #1 factor in foreclosures.... stated income that was flat out fraud. Many analysis have shown that credit is not the best predictor of who will repay their loans, debt-to-income is, followed by savings. It does not matter if you have 600 or 800 credit score, if you don't make enough money to pay your bills or have an emergency fund you are asking for trouble.
That is why FHA does not have a minmum credit score requirement. They look at income, debts, assets, job stability AND credit to determine if someone can pay the home. Its common sense underwriting.
Behind stated income the riskiest loan type I think is the Option ARM. Its great if used properly, but most people got an Option ARM for the same reason they went stated income... they couldn't qualify at the fully indexed rate with their income.
Its been shown that most non-conforming ARM loans were behind before they rate ever adjusted. The problem is people bought too much house expecting that home prices would keep going up and they could refi or sell.
Well there is a big difference between a prime ARM and a subprime arm in terms of foreclosure rate. Prime ARM's are not getting foreclosed on like subprime ones are.
As you said in your post and as I was trying to say it is much more complicated and situation specific on what type of loan is best for someone. 30 year fixed is definitely not the best option for plenty of people. It's the simple choice if you want to be safe and not do much research.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
