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help me with my mortgage application

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help me with my mortgage application

Old 10-29-04, 02:39 PM
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help me with my mortgage application

I'm looking to refi my 6.25% fixed rate loan to a 4.375% 3/1 ARM.

broker sent me the application and on the truth in lending disclosure there is my initial payments and what would happen if the rates went up by 2% a year. Is it normal to do this on an ARM? I'm nervous that I'm being pushed into a program where the rates are guaranteed to rise.
Old 10-29-04, 03:12 PM
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I believe they are required to warn you.

However, I also believe this might just be a terrible time to trade a fixed rate for an ARM. But I'm generally very (perhaps over-) cautious about ARMS.
Old 10-29-04, 03:16 PM
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Originally posted by OldDude
I believe they are required to warn you.

However, I also believe this might just be a terrible time to trade a fixed rate for an ARM. But I'm generally very (perhaps over-) cautious about ARMS.
me too. ARMs are too unpredictable for me. I went with a fixed rate last year on my first mortgage.
Old 10-29-04, 03:20 PM
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i did the math and at 7% my payment will still be less than what it is now since the PMI will go away. If the rate rises to 8.375% in the fifth year then it will take a few years at this rate for me to be on the losing side.

My payment now is $735. New payment would be $577 for the first 3 years and closing costs would be $2400. After 3 years I'm $3500 ahead. Say the rate rises by two points and then my payment goes up to $710. After 4 years I'm more than $3800 ahead. Another 2% rise the next year would make my payment $850.

If the rates go up that much then I can always take the cash I save and make a nice extra payment to reduce the payments since any equity I have will be wiped away by the resulting drop in prices.
Old 10-29-04, 03:27 PM
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If PMI will go away on new loan, you should be able to make old lender drop it. At least, check that alternative out, as well as checking "fixed rates" available. Still, if you've done the math including "what if" and it makes sense, proceed (with caution).
Old 10-29-04, 03:29 PM
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I have another 10 months with my current lender until PMI goes away. But it's only $30 of my payment.
Old 10-29-04, 03:34 PM
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You should really only go with an ARM when rates are high and not likely to go higher. That way your payment can go down if rates fall.
Old 10-29-04, 03:51 PM
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We are getting ready to get a 5.5% on a 30 year fixed. That's pretty low. Rates really have nowhere to go but up from here.

I read this guy everyday:

http://www.monstermoving.monster.com...nance/Comment/
Old 10-29-04, 04:30 PM
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You should be able to get PMI to go away even on a fixed loan... I would only conside an ARM if your going to move in 3 years....

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