Re-fi my ARM now or wait?

[Anonymous]

Dallas, maybe you could give me some insight??

Some details:

I have a 2-year ARM that already is resetting in September (resets every 6 months), however, the payment actually went down by $10 a month.  My interest rate with new payment will be 9.12%, down from 9.25%.  My loan balance is about $70,350, with the appraised value 2 years ago being $77,000 (small town in ND).  I think my new payment will actually be $776 approx.

Anyway, I would like to refinance to get a lower rate, hopefully through FHA.  As of next month, I will have gone a year without any late payments.  However, my problem is that I have a very high DTI (approx 50%, I think) due to the fact that my boyfriend and I share all our debts but everything is under my name due to his bad credit.

My monthly payments, aside from the mortgage payment, come to about $665 a month (credit card debt / car payment / student loan).  We will be paying off about $5500 of that debt in November, however, which would bring that DTI down quite a bit.

OH, and I make $31K/year.

Sorry to ramble, my question is:  should I try to re-fi now with the high DTI - not sure if anyone would touch that?  Or wait till we pay the debt off in November?  I also would like to re-fi my vehicle for a lower interest rate because right now it is at 12.95% and I'm not sure if I should try to do that first (I got the loan in March)?

Thanks for any help!

[Lel]

What index is your ARM tied to?

Most ARM indices are running pretty low right now. It's widely expected that both the Federal Reserve and the ECB are going to eventually increase interest rates to fight off inflation, so when your ARM resets in March, it could go up to a higher rate.

For now, since you are going to have a lower payment, you don't have to rush to refinance right now, but keep an eye on interest rates. It might be good to unload some of that debt so that your refi application is more attractive. Dallas will definitely have more insight into this.

[DallasLoanGuy]

pull out your note. what is the index, margin and caps.

if you cant figure it out, call the lender and ask them..... "i need to know my 'index', 'margin' & 'caps'..... this would be a good time to ask for a payoff......

i will explain after you post. feel free to bump this if i  dont answer right away.

looks like you have breathing room since rate went down. maybe have time to move some of 'his' debt off of your reports?!?!?!? <= i am not suggesting that you hide YOUR debt.... only that maybe you can move some of his off of you?!?!?

we will also discuss loan modification.... you may want to google it and read up. this is why i am telling you to ask for payoff. ;-)

[Anonymous]

thanks for the responses!

As far as using my boyfriend's credit for some of the debt, unfortunately I can't do that.  He has a smorgasboard of the worst kind of baddies:  judgement, repo, collections!  I think going into all relationships you should ask for a credit check first

Anway, I think I will call Wells Fargo today and get that information, as well as the pay-off amount.  I am curious to hear what you say about loan modification.

See below...

Thanks!

Message Edited by Elexi21 on 07-11-2008 10:13 AM

[Anonymous]

OK, I got the details:

MARGIN:  6.25

INDEX:  5.567 (rounding factor .125)

CAP:  can go up by 3% max or down by 3%

6-MONTH LIBOR

PAYOFF AMT (Using today's date):  $70,324.28 plus interest $717.89 and recording fee $10 = $71,052.17.  Any escrow balance remaining is refunded to you 15 days after house is PIF.

I am pretty sure my pre-payment penalty has already expired as well.

Message Edited by Elexi21 on 07-11-2008 10:14 AM

[Lel]

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@Anonymous wrote:

OK, I got the details:

MARGIN: 6.25

INDEX: 5.567 (rounding factor .125)

CAP: can go up by 3% max or down by 3%

6-MONTH LIBOR

PAYOFF AMT (Using today's date): $70,324.28 plus interest $717.89 and recording fee $10 = $71,052.17. Any escrow balance remaining is refunded to you 15 days after house is PIF.

I am pretty sure my pre-payment penalty has already expired as well.

Message Edited by Elexi21 on 07-11-2008 10:14 AM

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The "index" part of your rate is variable, and changes from day to day. The number you gave - 5.567 - was the current 6 month LIBOR rate when you signed the loan. It has changed since then, to your advantage. Fortunately for you, when your lender recalculated your interest rate, it happened to be during a time when the LIBOR was running pretty low, as it is currently about 0.25% higher right now.

You can see how the LIBOR changes at this website:

http://mortgage-x.com/general/indexes/wsj_libor_history.asp?y=2008

My ARM has two different caps - one cap limits the amount that the interest rate can change at each adjustment, and the other cap limits the maximum interest rate for the life of the loan. Does that 3% represent the lifetime maximum, or the amount that it can adjust every 6 months?

[Anonymous]

Thanks for the info. I am pretty sure the rep from WF said it was the max it could raise over the life of the loan...

Message Edited by Elexi21 on 07-11-2008 12:14 PM

[DallasLoanGuy]

6mo libor is 3.10 this week.

caps are usually shown like this: 2/1/6

2 = max first year adjust

1= periodical cap(how much it can adjust in subsequent adjustments. (either yearly or every 6 months

6= lifetime cap

[Anonymous]

I guess my main question was just if I should try to re-fi now with the high DTI to try to get a lower payment, or just wait it out until November.

I already know what my new payment will be for the next 6 months so I guess that really isn't an issue.

But, it probably is best to stick it out and pay off some debt, will probably save me less hassle.

[DallasLoanGuy]

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Elexi21 wrote:
I guess my main question was just if I should try to re-fi now with the high DTI to try to get a lower payment, or just wait it out until November.

I already know what my new payment will be for the next 6 months so I guess that really isn't an issue.

But, it probably is best to stick it out and pay off some debt, will probably save me less hassle.

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you will pay a little premium for scores below 620.... but we dont know what guidelines will do in the future.

how soon can yu get scores up?