OK, need to ask this: ARM mortgage set to increase...

[dscurlock]

Can I ask a dumb question. Why do people get these types of mortgages? I've seen it on the boards a lot and I'm just wondering why. Why wouldn't you get a fixed rate in the beginning and never worry about this??

Becase we are stupid...I am one of them...I thought we got a fixed rate, I just can not remember signing an adjustable one, but i guess we did....we did not have too, no one forced us, we could have walked at anytime and waited for a better opportunity...Im just a fool, and i admit it...some people (scum) love to take advantage of the weak, your income, your credit, your spouces income, credit all play a big role.. I was told, we could have went with the fixed, but it would have cost us even more money, so we went with an adjustable hoping our credit would get better over the next two years, we played poker, and we lost, it did not turn out the way we hoped, I have a ballon that is payable in full in feb $20,000, (20% of the mortg) no money in the bank, and no one will refinance...its actually harder to refinance then it is to just buy a new house, go figure...

If you have shaky income/credit, do not get roped in with the adjustable rate...they will be sitting back cheering you on, oh yes, no problem, you can refinance in two years, only if your credit has gotten much better, if its the same or worse.. Your just making a bet...besides, if you have a strong credit score, they would never offer you an adjustable, this is how the scum of the earth work.. we would have been taken advantage of either way we went, we just went with the lessor amount and in hopes to change things in two years....

I wander how this is going to work out, the 80% of the loan will go up, and will be paid as normal, but the 20% of the loan, well they are going to want their money...they are not going to get it...can they forclose, I would not think so being only 20% of the loan, who knows...

If you do not have a credit score of 700+, it would
wise not to settle for an adjustable...It would be
wise to wait a little longer.

[CindyLou]

I kind of look at an ARM the same as the stock market or the craps table. It can either be a calculated risk or just a roll of the dice depending on the circumstances. If all goes as planned in your life and the market remains fairly constant then your calculated risk can turn great.

On the other hand one illness in the family, the loss of a job, or a downward turn in the housing market can quickly change the concept into a roll of the dice and can turn distastrous.

In the end that higher fixed rate or even renting didn't look so bad. But hey, hind sight is 20/20, right. And if we all had 20/20 financial vision we probably wouldn't be socializing on BKFORUM.com So.........I wish the best to all "you people" who are struggling with your ARM while I still throw away my money to my landlords and pay taxes out my %$% while struggling to even get into a house. At least you are a step ahead of me in a weird kind of way and at least in a house!!

Hopefully you can find a way to stay in it for many years to come.

[truckerswife]

Ours is set to go up in a little less than a year. It is not supposed to go up more than 1/2% every 6 months. Currently we have one mortgage at 10% and another at 12%. We went the 80/20 route. It is our first house, nothing down, and hubby had bad credit (i didn't have any credit). And I was not working at the time. We didn't really research other options. The apartments we were in were being sold and we had to find somewhere to move fast. We, thinking we would get turned down, applied for a loan. We got it. I love my home but I really wish we had done things different. Mainly, I wish we had an attorney look at the contract. The contracts both list 2 different interest rates (about 1/2% difference in both). But you live and learn. Hubby got hurt at work and we had medical bills and check advance (5) places from 3 years ago threatening garnishments. Got behind on mortgage and decided to file 13. We are in 100% payback in 40 months. I am hoping to pay it off within 24 months and then re-fi with no cash back.

[chpxiii]

I really wish we had done things different. Mainly, I wish we had an attorney look at the contract. The contracts both list 2 different interest rates (about 1/2% difference in both). But you live and learn.

Yes. I am looking to start rebuilding my credit and hope to purchase a house in 2 years. I'm in the process of making plans (and contingency plans too!) One thing I've learned is that there are lawyers who all they do is go to house closings to evaluate your contract. I'll definitely be finding a lawyer before I even start looking at buying a home.

[emandmeagsmom]

We were renting our house. It was rent to own and the owners wanted us to go on and buy the house. Our credit wasn't great but we managed to get approved for an ARM. Biggest mistake we made. 5 months after we got the loan, I had a blood clot in my leg and had to cut my hours back. That was the start of our downfall. 1 and 1/2 yrs later, our ARM was going up 200.00 more a month and we just cant afford it. We have wound up going chap 7. I had a bad feeling but you know that was the american dream or so we thought.

[dscurlock]

Ours is set to go up in a little less than a year. It is not supposed to go up more than 1/2% every 6 months. Currently we have one mortgage at 10% and another at 12%. We went the 80/20 route. It is our first house, nothing down, and hubby had bad credit (i didn't have any credit). And I was not working at the time. We didn't really research other options. The apartments we were in were being sold and we had to find somewhere to move fast. We, thinking we would get turned down, applied for a loan. We got it. I love my home but I really wish we had done things different. Mainly, I wish we had an attorney look at the contract. The contracts both list 2 different interest rates (about 1/2% difference in both). But you live and learn. Hubby got hurt at work and we had medical bills and check advance (5) places from 3 years ago threatening garnishments. Got behind on mortgage and decided to file 13. We are in 100% payback in 40 months. I am hoping to pay it off within 24 months and then re-fi with no cash back.

our Arm will expire Feb 2008, so far we have been turned down for refinaincing from several compaines...ive heard it is much harder to get refianced compared to just buying a house, maybe this is how these ARM deals get you in, they know you did not have good credit to begin with, and if you can not refiance when the ARM is over, well, they got ya...and with todays home finance market... you said you have under a year, try to get refinanced
and see what happens, im curious in todays crunch, on what they would say...

[B12]

Ok, I finally turned blue! LOL

An Adjustable Rate Mortgage, ARM, has nothing WHATSOEVER to do with good or bad credit. People with excellent credit get ARMs.

They are not a craps shoot, or the stock market, and the people who sell them are not "scum of the earth."

PLAIN AND SIMPLE........................

If you are going to be in your house less than a designated period, get an ARM.

If you are going to live in your house more than 5-7 years, get a FIXED rate.

If a mortgage broker told you that you could not qualify for a refi or a new mortgage without the "sometimes" lower rate of an ARM, and you wanted that loan at any costs, then you CHOSE the ARM.

Understand this very simple concept of the difference between an ARM and a FIXED rate and then you decide which product you want. The mortgage person does not make the decision for you.

[B12]

Hi Truckers Wife,

Your contract listed two different interest rates because the government requires all lenders to disclose the "true" interest rate.

When you locked in your rate, you were given an interest rate.
This is the interest rate you truly will be paying on your loan. It is called the effective rate.

But, lets say you paid one point on the loan or other fees associated with the loan. The APR (annual percentage rate) is the effective rate taking into account these one time fees. Therefore the APR is higher than the true rate you will be paying.

The government instituted the APR requirement so that people could easily compare mortgage interest rates.

For instance, you see a 6% rate with 2 points. Then you see a 7% rate with no points. Which mortgage is cheaper? (remember that points are prepaid interest on a loan)
You really cannot tell until you look at the APR of both loans, which is, the interest rate taking into account one time fees.
The APR states the "true" interest rate.

The interest rate you will be paying on the loan though, is only the effective rate. The APR is just to give the consumer a comparison of apples to apples.

Hope that helps to explain the two rates.

[dscurlock]

of course.

[B12]

I am sorry, dscurlock, the choice is always the consumer's. Lenders do not, cannot, will not make the choice for you. They present all the facts. If you do not qualify for a product and they suggest another that you would qualify for, take the time to understand the new product. Say no if it does not sit well with you.

Possibly the lender and closing agent did not explain your loan to your full understanding and for that I am sorry for you.

Do not ever sign anything unless you fully understand the document. Do not ever feel rushed at a closing. Take all the time needed to fully understand what you are signing.

[B12]

LOL sorry if my post seems out of place. The previous post I was responding to was erased.