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I understand your point...however, isn't this what has gotten so many people into trouble today?
Vicki
I think most people who are in trouble have ARMS with an initial rate much higher than 3.75 percent and that adjust a lot more than one percent at a time.
I understand your point...however, isn't this what has gotten so many people into trouble today?
So many took the adjustable rate mortgages with the first year being so low but each and every year, the rate went up. They QUALIFIED on the first year's monthly payments. By the 3rd year, because their income didn't go up, they were having a hard time making the payments.
So...I say this to those that are contemplating this...know the best AND the worst case senerios when deciding how much monthly payment you can afford.
Vicki
SECU is not going to put someone in a predatory loan, plus I don't think they sell their loans to someone else, so it is in their interest to to keep people in their homes and with payments they can make. To qualify for 100% financing you have to have perfect credit, when I was getting a house I talked to them (I am a member) and they said I would not get 100% and that they might not be the best place to look.
This is a great loan for people like my parents, they are retiring, signed up for a 2 year ARM at cheap rates because the house they bought will be paid for in that amount of time, so no need to worry about the rate increase.
And another thing. Imagine the kind of buying power a young SECU member who is a first time home buyer has right now!
He or she has a vast low cost inventory to choose from, an $8,000 no-strings-attached check from the government and potentially a 3.75 percent intial interest rate on the mortgage.
I understand your point...however, isn't this what has gotten so many people into trouble today?
So many took the adjustable rate mortgages with the first year being so low but each and every year, the rate went up. They QUALIFIED on the first year's monthly payments. By the 3rd year, because their income didn't go up, they were having a hard time making the payments.
So...I say this to those that are contemplating this...know the best AND the worst case senerios when deciding how much monthly payment you can afford.
Vicki
It's not that people's adjustable rate mortgages have gone up, it's that many people stretched themselves too thin financially. Not to lecture anyone on how to calculate what you can/can't afford, but a large portion homeowners and ex-homeowners did not properly budget their home purchase. If you can't afford your mortgage to go up 1%, 2%, even 5%, you have planned poorly. The bottom line is many people bought houses they couldn't afford, and the many banks encouraged it.
Interesting. I must admit I am fearful of ARMs but I can see how this could be used by some. If it were me I think I would not use the lower rate as an excuse to "buy more house". I would still buy in the range I was originally planning to buy and save/invest the savings realized through the lower rate.
Interesting. I must admit I am fearful of ARMs but I can see how this could be used by some. If it were me I think I would not use the lower rate as an excuse to "buy more house". I would still buy in the range I was originally planning to buy and save/invest the savings realized through the lower rate.
Interesting. I must admit I am fearful of ARMs but I can see how this could be used by some. If it were me I think I would not use the lower rate as an excuse to "buy more house". I would still buy in the range I was originally planning to buy and save/invest the savings realized through the lower rate.
I did just that, I qualified for $110-$120K but bought at $87.5K This allows me to lose my job, work at McDonalds and still pay my mortgage (while taking the bus and eating Ramen every night) if needed.
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