Mortage advice

[fastfredracing]

I hope some of you finance gurus can give me some advice. I have an arm loan that goes adjustable in august, and wouldnt you know, the whole real estate thing goes sour. I am self employed, and do not show much income. Before you flame me, I really am not hiding income, just rather have deductions than pay taxes , it is expensive to run a buisness. I have decent credit, but I am afraid that the loan programs that I have used in the past are nearly non existant, or they have really tightened the reigns on them and I may not qualify anymore. I am prepared for the increased payments , and I surely will not loose my property over this, but I really hate to think that my mortage will go up 400-500 dollars a month over the next couple of years. The property is a mixed use, commercial /residential. ( I run my buisness out of a huge building on the property, and my parents live in the house that came with it. I am wondering if I should ride the economy out, or maybe look at some form of commercial loan, and really smack this loan out in 15 years. Any input help would be greatly appreciated. I turn bolts for a living and although I am good with money, I am trying to make smart long term decisions.

[DanielDudley]

Call your bank, call a mortgage broker. My wife was one for ten years, I'm sure she would talk to you if you want to call. PM me if you want our #. She doesn't do it anymore, she just knows a lot.

[Rick Lee]

What kind of ARM do you have? If my ARM were to adjust today, it would go down. Be sure it's going up before you fret. Worst case, I'd probably just refi into an FHA. They have loose ratios.

[TerryBPP]

If you don't have 20% to slap down these days you're pretty much SOL. I'm in the same situation with a house. Not only does every mortgage company want 20%, they also want the $70k deficiency in the home value.

Try calling your mortgage company directly and see f they are offering any in house refi programs.

[MRM]

It's a myth that it's hard to get a mortgage these days. Rates are low and banks are lending. Call the bank you have your business accounts with first. Then call a mortgage broker to see who will give you the best rates.

[berettafan]

Originally Posted by MRM

It's a myth that it's hard to get a mortgage these days. Rates are low and banks are lending. Call the bank you have your business accounts with first. Then call a mortgage broker to see who will give you the best rates.

not so sure about that. the issue is probably one of appraisals not quite making the grade.

[TerryBPP]

Originally Posted by berettafan

not so sure about that. the issue is probably one of appraisals not quite making the grade.

Bingo. They will only refi your for the appraised value. And with low home sales its probably not going to be close to what you paid even 5-6 yrs ago.

[Rick Lee]

If you're upside down on the house, then it will be tought to get a loan. But not everyone is upside down. FHA is probably the closest to 100% LTV someone can get anymore and they're pretty easy to get.

[Zeke]

Originally Posted by Rick Lee

What kind of ARM do you have? If my ARM were to adjust today, it would go down. .

Not if it had one of those ridiculously low introductory rates. He could be negative up to the point where it goes adjustable.

[Rick Lee]

Originally Posted by milt

Not if it had one of those ridiculously low introductory rates. He could be negative up to the point where it goes adjustable.

Mine is at 4.375% and tied to LIBOR. I'm almost positive it would go down if it were to adjust today. At worst, it would stay the same.


Negative is not a function of the rate, but rather how much you choose to pay, if it's an Option ARM. Pay less than the actual note rate and you will build negative equity.

[berettafan]

Originally Posted by Rick Lee

Pay less than the actual note rate and you will build negative equity.

OMG yet another way to bring this country to ruination.

[Rick Lee]

Originally Posted by berettafan

OMG yet another way to bring this country to ruination.

In theory, it's actually a pretty decent product. You pay some nominal amount per month for your mortgage and hopefully invest, whatever you should be paying, into something with a return better than your note rate, plus taxes, plus inflation. At the end of the year, you pay off your negative equity with the dividends or gain from your investment(s). Of course, the real problem is that very few people who got these loans are the kind of folks who are disciplined and savvy enough to do it right. But if you know what you're doing, you can save a lot of money this way.

[Dantilla]

"build negative equity".

Sounds to me like a sugar-coated way of saying "digging a deeper pit".

[Jim Richards]

leverage is great until the lever breaks.

I think RL is right, the saving/investment discipline is not that widely prevelent.

[Rick Lee]

Originally Posted by Dantilla

"build negative equity".

Sounds to me like a sugar-coated way of saying "digging a deeper pit".

Now, the real idiots are the ones who trade in a car they're upside down on, have the dealer pay off the loan and tack the negative equity onto the new car loan. So, in addition to probably paying full sticker price and getting a high interest rate, you basically have a loan for way more than your depreciating asset is worth even before you drive it off the lot. I hear these commercials on the radio all the time and I'll bet it becomes a lot more common now with people wanting out of their SUV's.

[Porsche-O-Phile]

Originally Posted by Dantilla

"build negative equity".

Sounds to me like a sugar-coated way of saying "digging a deeper pit".

Yep.

It's absolutely unfathomable to me how people can be so stupid as to not realize this. If this REALLY is a reflection of how dumb the average person is out there, we're in a lot more deep schit than even I thought. . .

Do these people not understand that "owning a home" is worlds of difference from "owning a loan"?

[berettafan]

so let's all go get HELOC's and play the market. or better yet hit the craps tables!

[RANDY P]

you'll probably have to check with a local bank or CU to do this loan. Due to the fact the property is "mixed use" and it's technically an income producing property the big players will run from this one.

My educated opinion (I'm in the biz) says it's probably going to be a local lender style deal, not brand name that will touch this.

PS- Rick is right. Dig up your old "note" and check the following:

the index you are tracking against - probably LIBOR

and the margin you will pay -


go to the local newspaper financials and find the appropiate index you agreed to, and add your margin that should be your new rate after adjustment. It's probably gone down.

good luck.

rjp

[Aurel]

Do you currently own all the cars in your signature? If that is the case, you could sell 6 of them, only keep two that you prefer, and you`d have a decent downpayment for a house.

Aurel