topic Re: IS THIS A GOOD DEAL? in General Credit Topics

IS THIS A GOOD DEAL?

Anonymous — Wed, 01 Aug 2007 18:00:14 GMT

Been trying to get a refi. Here's what the lender I am working with came up with:

8.8% fixed 5/1 ---without escrow

Pay off all credit card debt except Capital One cards (20K)

No appraisal

Payment $3065.00

No payment til October 1, 2007

Loan amount 290K

No prepayment penalty

8.95% fixed 5/1--- with escrow

Pay off all credit card debt and loans exc. Cap One (20K)

No appr.

Payment $3096.00

No payment til Oct. 1, 2007

Loan Amount $290K

No prepayment penalty

** Sorry I posted on Loan Issues thread but no hits, forgive the duplicate****

Message Edited by myhearts07 on 08-01-2007 11:00 AM

Re: IS THIS A GOOD DEAL?

Anonymous — Wed, 01 Aug 2007 18:02:58 GMT

Depends. What's your property value and FICO score?

Re: IS THIS A GOOD DEAL?

Anonymous — Wed, 01 Aug 2007 18:05:53 GMT

Since they are not doing an appraisal, I don't know. Last appraisal was around 306K but I never got a copy of it. My ficos are: tu 555/ ex 579/ eq 569 dh's are: 600's across the board.

Re: IS THIS A GOOD DEAL?

Anonymous — Wed, 01 Aug 2007 18:09:13 GMT

It sounds OK with your scores. Although if hubby's over 620 and the primary wage earner (makes the most $$) then you might be able to fare a bit better.

Where do you live?

Re: IS THIS A GOOD DEAL?

Anonymous — Wed, 01 Aug 2007 18:22:55 GMT

Illinois

Re: IS THIS A GOOD DEAL?

chartley3 — Wed, 01 Aug 2007 18:29:00 GMT

Eve,

I would really try to get a 30 yr fixed and not a 5/1 ARM if you can help it unless you want to refi again in the next couple of years.

Re: IS THIS A GOOD DEAL?

Anonymous — Wed, 01 Aug 2007 18:48:48 GMT

I will ask her about the 30 year fixed rate and see what she comes up with. We don't have a problem refinancing in a couple of years, especially after all I have learned on this forum, we will not allow ourselves to be caught up in this type of cycle of debt that is hard to get out of.

Re: IS THIS A GOOD DEAL?

Anonymous — Wed, 01 Aug 2007 18:50:55 GMT

How much will be wired into your account?

Re: IS THIS A GOOD DEAL?

Anonymous — Wed, 01 Aug 2007 18:55:43 GMT

There will be no cash out wired to our account. They are paying of $23K in cc and loan debt.

Re: IS THIS A GOOD DEAL?

Anonymous — Wed, 01 Aug 2007 19:01:51 GMT

I was asking because my mother just refinanced her home to get cash. She went through a mortgage broker. She had to pay off debt as well but got a sweet 37,000 out of the deal.

Re: IS THIS A GOOD DEAL?

Anonymous — Wed, 01 Aug 2007 19:03:22 GMT

I wish. But the payment may be more than we can handle right now and we gotta keep perspective.

Re: IS THIS A GOOD DEAL?

Anonymous — Wed, 01 Aug 2007 19:37:30 GMT

myhearts07 wrote:
I will ask her about the 30 year fixed rate and see what she comes up with. We don't have a problem refinancing in a couple of years, especially after all I have learned on this forum, we will not allow ourselves to be caught up in this type of cycle of debt that is hard to get out of.

Congrats on getting out of the debt trap. But you can't be sure that you "won't have a problem refinancing in a couple of years" because of the factor that is completely out of your control: interest rates. I agree regarding the 30-year fixed rate even though it will mean higher payments.

Re: IS THIS A GOOD DEAL?

Anonymous — Wed, 01 Aug 2007 20:11:15 GMT

Well in that case, I can only pray that the interest rates stabilize a little more than they are now. I am hoping that with knowledge and focus with being on time with payments and keeping utilization where 1-9% that we could get our scores up to the 700's and be able to refi before a couple of years. If not, well I can't worry about that right now because it will temporarily relieve the final strain that we are under trying to pay over $4500 in monthly debt especially with me being self-employed and not able to find a job to supplement my income in the interim.

THanks for all of you guys' input. I appreciate that very much that you are thinking for me in areas that I am not familiar with.

Eve

Re: IS THIS A GOOD DEAL?

Anonymous — Thu, 02 Aug 2007 13:44:29 GMT

If you must get an ARM - Check the cap rate !!!!

Check the Pre-payment penalty times!!!

My first mortgage was an arm- never again.

Re: IS THIS A GOOD DEAL?

Anonymous — Thu, 02 Aug 2007 15:12:04 GMT

Hey Tim,

What is the cap rate? There is no prepay penalty.

Re: IS THIS A GOOD DEAL?

Anonymous — Thu, 02 Aug 2007 15:22:57 GMT

myhearts07 wrote:
Hey Tim,

What is the cap rate? There is no prepay penalty.

Eve - There's more basic info here that you really need to get from the potential lender to understand how the loan works.

* When the ARM ends, how is the rate determined? It will be an indicator such as LIBOR plus a percentage such as 6%. LIBOR changes every day but it's approximately 5% today. So if your loan reset today, your APR would be 11% (5% + 6%). That's a huge jump so you have to consider whether you will be able to pay it.

* Is the rate capped? This means, is there a ceiling for the APR? Say it's 10%. In the previous example, the rate would be 11% but since you have a 10% cap, your rate would never be more than 10% during the term of the loan.

Hope this helps and doesn't confuse you more!

Re: IS THIS A GOOD DEAL?

Anonymous — Thu, 02 Aug 2007 16:18:25 GMT

Paperwork says the following:

Conforming 5/1 Arm

Initial Interest Rate: 8.8

Maximum Interest Rate 14.8

First Year Payment 2291.80

Max. Payment 3620.55 (In the 11th year)

What do you think?

Re: IS THIS A GOOD DEAL?

Anonymous — Thu, 02 Aug 2007 17:25:41 GMT

myhearts07 wrote:
Paperwork says the following:
Conforming 5/1 Arm
Initial Interest Rate: 8.8
Maximum Interest Rate 14.8
First Year Payment 2291.80
Max. Payment 3620.55 (In the 11th year)

What do you think?

OK, so your interest rate is capped at 14% and your payment is capped at $3620.55.

And now for something a bit OT ... lenders will be looking at something else very important other than your credit and the LTV (loan to value) on the house: your income. They won't lend you an amount so that your monthly payments of PITI (principle, interest, taxes, and insurance) end up being more than a certain percentage of your gross or net income. The mortgage gurus can chime in here but I vaguely remember that they don't want you to exceed 25% of gross. I don't know how realistic that is in today's market though. Also they look at how much other debt you are carrying as a percentage of your net income. You don't need to disclose these numbers here, just suggesting you look at the whole picture.

Re: IS THIS A GOOD DEAL?

Anonymous — Thu, 02 Aug 2007 19:38:17 GMT

Thanks, Mas.

My ultimate goal is to refi as soon as possible and get out of this arm. I hope that dh and I will be in the upper 600's in a few months and I do believe that is feasible and then refi for a fixed, lower rate. I talked with broker and she said they couldn't offer me a fixed rate now because our interest rate would be so up there, much higher than where it is now and be hard to justify doing the loan since we are coming from a 6.5% rate.

Re: IS THIS A GOOD DEAL?

Anonymous — Thu, 02 Aug 2007 22:56:40 GMT

Eve - is there ANY other way you can take care of your other bills without the refi? I sure hate to see you go from 6.5%!

~Tex