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Refinance

Discussion in 'Homeowners Corner' started by rich351854, Oct 22, 2010.

  1. rich351854

    rich351854 New Member

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    I so strongly disagree with the comments about ARMs (Adjustable Rate Mortgages).... I can afford my loan at both the ARM and 30 year fixed rates. I selected the ARM as financially it makes the most sense. People did not get in trouble with ARMs... IF YOU HAD A TRADITIONAL ARM LOAN YOUR CURRENT RATE WOULD BE SUPER LOW!!!!!! People got in to trouble with reverse amortization loans, low to no down payment situations, unemployment, balloons, large piggy back loans with big premiums....
     
  2. twohokies

    twohokies New Member

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    I agree with you. ARMs aren't good for most people, but they can be really good if you use them appropriately. We did an ARM when we moved into our current house because the rates were lower and with our track record, we would move before the rates started adjusting at year 10. Now that we are in our house, the kids have started school and we've been here longer than anywhere else, we re-fi'd into a 30 year at a rate lower than our ARM. We may eventually move, but it won't be for at least 7 years and so another ARM doesn't make sense for us now. *WE* did not use an ARM to buy more house, even though we were qualified for an insane amount of house.
     
  3. rich351854

    rich351854 New Member

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    In re-reading the posts... I see that my reaction was a bit strong... with that being said - it is end of the day what makes you comfortable, and of course there are amazing 30 year rates out there and one needs to strongly consider the value of a long term lock in....

    On a brighter note... I think the mess we are in as a country will put us in a situation where rates will continue to stay at historically very low levels for the medium term. Any material rise in interest rates will shock the economy, and slow the pace of growth - I do not see us being in a position to take such a stance for many years to come -

    My guess: The largest risk to rate increases in the 5-10 years is the demand for capital coming out of the Government (Federal and State/Local) squeezes supply to such an extent that rates have to rise...... This is a real risk, as the approach seems to be that we will continue to further leverage in hopes of spurring tax revenue vs.finding direct ways to increase revenues (i.e raising rates) and/or finding opportunities for savings.
     
  4. Brassy

    Brassy Hiyah

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    Don't go with Bank of America... We have a loan to refinance once kaosdad gets a job. We have a jumbo Conventional ARM at 5.875%, the protion of the ARM resets in Feb.

    We selected the pay bi-weekly for the loan, but BOA will not allow ARM mortgages to do the 26 week thing were you pay down the principle...first time we hit that, and no, we don't have THAT kind of money to make an extar payment a month.

    Used to have a mortgage with Wells Fargo, which you had to pay a small fee up front and tha would allow you to do the 26 week payment plan. when that loan closed, they told us at the time that if we ever had another mortgage with them, we'd not have to pay the fee again.
     
  5. TeamDonzi

    TeamDonzi ShowMeTheMoney!

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    Brassy, BOA has updated their online payment system to allow you to pay extra principal each month. There was a while when they did not permit this. You could add the extra each month=1 payment /12. It doesn't knock off the interest quite as fast, but it certainly helps! It's against the law for them to disallow you to pay down principal, just FYI.

    Rich, I think we are all in agreement. Some folks are great rainy day planners, others not so much. If we look at historical charts for the various indices, they have been over 9 at certain points and I don't know anybody that can afford that!! NOT that that is going to happen, but if inflation steps up, we'll have these kinds of issues. But you're right, it's a very personal decision based on your own money skills. Rock on, because I love it when people get the opportunity to save money!
     

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