ARM vs Fixed Rate Mortgage in 2005
04-26-2005, 09:14 PM
#43
I have a question for you experts out there. I just signed the contract to purchase a condo that will be completed next Spring (May-July 2006). Well, I am a fairly impatient person and not having a good time about the possibility of rising interest rate by the time I settle. What would you do? Would you try to get an extended lock on mortgage or would you just wait until next year to get one? The purchase price was 460K.
04-26-2005, 09:20 PM
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Originally Posted by Novice
I have a question for you experts out there. I just signed the contract to purchase a condo that will be completed next Spring (May-July 2006). Well, I am a fairly impatient person and not having a good time about the possibility of rising interest rate by the time I settle. What would you do? Would you try to get an extended lock on mortgage or would you just wait until next year to get one? The purchase price was 460K.
04-26-2005, 09:32 PM
#45
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Just saw this thread pop up again -- FWIW, after a lot of research and contemplation I'm going to go with a 5 year ARM through a private banker service. Based on my history of mortgage ownership this product will give me the best cost to risk ratio. As a perk, the bank will also change it to one of their other products without refinance for a small fee anytime during the life of the loan.
04-26-2005, 09:36 PM
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Originally Posted by Slimey
Just saw this thread pop up again -- FWIW, after a lot of research and contemplation I'm going to go with a 5 year ARM through a private banker service. Based on my history of mortgage ownership this product will give me the best cost to risk ratio. As a perk, the bank will also change it to one of their other products without refinance for a small fee anytime during the life of the loan.
04-26-2005, 10:38 PM
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Originally Posted by Slimey
Just saw this thread pop up again -- FWIW, after a lot of research and contemplation I'm going to go with a 5 year ARM through a private banker service. Based on my history of mortgage ownership this product will give me the best cost to risk ratio. As a perk, the bank will also change it to one of their other products without refinance for a small fee anytime during the life of the loan.
Good stuff. Make sure the company you use will not sell your mortgage, meaning it's a lender. Because that whole thing about changing a loan once it starts goes out the window if your loan is sold.
04-26-2005, 10:41 PM
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Originally Posted by Novice
I have a question for you experts out there. I just signed the contract to purchase a condo that will be completed next Spring (May-July 2006). Well, I am a fairly impatient person and not having a good time about the possibility of rising interest rate by the time I settle. What would you do? Would you try to get an extended lock on mortgage or would you just wait until next year to get one? The purchase price was 460K.
I would do a one-year lock with a one-time float down. Basically you would lock in, if rates go down before closing, you can float down once. Rates are going up.
04-26-2005, 10:52 PM
#50
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Thanks. Good point and I asked the question.
They specifically said that they can do 'more' with the loan since they (the bank) will retain ownership of the loan. They said that they keep all loans under $1.5M, not that I'm ready for that level of ownership. They basically quoted me 1/8% under the broker's best rate in order to retain my business, and terms and closing costs look decent, plus they'll throw in free banking perks.
I feel a bit bad for the broker. He seems like a good dude with a long track history and good recommendations. ...but the bank really wants my business and I cannot argue with cheaper and good terms.
They specifically said that they can do 'more' with the loan since they (the bank) will retain ownership of the loan. They said that they keep all loans under $1.5M, not that I'm ready for that level of ownership. They basically quoted me 1/8% under the broker's best rate in order to retain my business, and terms and closing costs look decent, plus they'll throw in free banking perks.
I feel a bit bad for the broker. He seems like a good dude with a long track history and good recommendations. ...but the bank really wants my business and I cannot argue with cheaper and good terms.
04-27-2005, 06:21 AM
#51
Originally Posted by TLover
Hmmm, is the price locked in on your condo? If it is, the two will balance out, maybe? Rising value of condo vs. rising interest rate. As far as locking in a rate, I don't think locking in a rate for that long a period of time is possible.
04-27-2005, 06:34 AM
#52
Wells Fargo has a 360 day lock program as many of you know. Initially, they won't let me lock on a 30 yr loan-only ARMS. Then, they will let me float once and switch to a 30 yr loan. The problem is that their rates are generally high.
Have you guys used any companies listed in Bankrate.com to get your mortgage? I contacted one-I was so surprised that this guy on the phone did not know much about the mortgage and didn't even get back to me about my questions. My construction company and agents hate these internet companies.
Any thoughts? I mean if you can get a loan at 5.15% on the internet vs. 6% from Bank of America, what would you do?
Have you guys used any companies listed in Bankrate.com to get your mortgage? I contacted one-I was so surprised that this guy on the phone did not know much about the mortgage and didn't even get back to me about my questions. My construction company and agents hate these internet companies.
Any thoughts? I mean if you can get a loan at 5.15% on the internet vs. 6% from Bank of America, what would you do?
04-27-2005, 08:34 AM
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Originally Posted by Slimey
Thanks. Good point and I asked the question.
They specifically said that they can do 'more' with the loan since they (the bank) will retain ownership of the loan. They said that they keep all loans under $1.5M, not that I'm ready for that level of ownership. They basically quoted me 1/8% under the broker's best rate in order to retain my business, and terms and closing costs look decent, plus they'll throw in free banking perks.
I feel a bit bad for the broker. He seems like a good dude with a long track history and good recommendations. ...but the bank really wants my business and I cannot argue with cheaper and good terms.
They specifically said that they can do 'more' with the loan since they (the bank) will retain ownership of the loan. They said that they keep all loans under $1.5M, not that I'm ready for that level of ownership. They basically quoted me 1/8% under the broker's best rate in order to retain my business, and terms and closing costs look decent, plus they'll throw in free banking perks.
I feel a bit bad for the broker. He seems like a good dude with a long track history and good recommendations. ...but the bank really wants my business and I cannot argue with cheaper and good terms.
04-27-2005, 08:35 AM
#54
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Originally Posted by Novice
Wells Fargo has a 360 day lock program as many of you know. Initially, they won't let me lock on a 30 yr loan-only ARMS. Then, they will let me float once and switch to a 30 yr loan. The problem is that their rates are generally high.
Have you guys used any companies listed in Bankrate.com to get your mortgage? I contacted one-I was so surprised that this guy on the phone did not know much about the mortgage and didn't even get back to me about my questions. My construction company and agents hate these internet companies.
Any thoughts? I mean if you can get a loan at 5.15% on the internet vs. 6% from Bank of America, what would you do?
Have you guys used any companies listed in Bankrate.com to get your mortgage? I contacted one-I was so surprised that this guy on the phone did not know much about the mortgage and didn't even get back to me about my questions. My construction company and agents hate these internet companies.
Any thoughts? I mean if you can get a loan at 5.15% on the internet vs. 6% from Bank of America, what would you do?
What are you looking for? I would also recommend against bankrate.com. The place give you average rates around the country. I have tred using them, it was a waste of my time.
04-27-2005, 09:10 AM
#55
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Originally Posted by BigPimp
What are you getting? I will tell you if you are getting a good deal.
5/1 ARM 0 points
5.125%
2% adj cap 6% lifetime
2.75 margin
Fees ~$1100.
This is for Ozaukee County, WI up to $650K loan.
When I was looking, the only thing I'd like to haggle a bit over would be the margin, but that seemed to be standard for all the products via bank or broker.
The mortgage can be modified (change to different product) without refinancing for $750. I must say that I find this a decent selling point and it would make refinancing along the way almost a no-brainer.
The broker in WI couldn't do any better. Shopping around online and with my current lender didn't get me any better either. Let me know your thoughts.
There's also a 3/3 ARM with a rate of 4.6 and same caps. I thought about this but (if I'm in the house for 5-7 years) I fear that this has the potential to cost more if the rate ups to the cap at the first adjustment.
04-27-2005, 09:33 AM
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The rate sounds decent. How large is the loan, how much down?
Our products are a little bit better in the sense of the caps and margins. All my 5/1s are 2.25 margins and lifetime cap of 5%. At 1100 costs are ok, slightly higher than where we would be, but that's fine.
The 750 refinance sounds like a gimmick to get you in the door. Probably does not include fees for title and recording. Also, you are not very likely to refi, but rather likely to move. Lot's of smaller banks and CUs use that gimmick to get the customers in but in the long run there is no value to you as the consumer.
What's a 3/3, did you mean 3/1? In your case, I would not recommend a 3/1 as you are likely to be in the property longer.
Our products are a little bit better in the sense of the caps and margins. All my 5/1s are 2.25 margins and lifetime cap of 5%. At 1100 costs are ok, slightly higher than where we would be, but that's fine.
The 750 refinance sounds like a gimmick to get you in the door. Probably does not include fees for title and recording. Also, you are not very likely to refi, but rather likely to move. Lot's of smaller banks and CUs use that gimmick to get the customers in but in the long run there is no value to you as the consumer.
What's a 3/3, did you mean 3/1? In your case, I would not recommend a 3/1 as you are likely to be in the property longer.
04-27-2005, 09:52 AM
#57
Where is my super sauce?
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Originally Posted by BigPimp
The rate sounds decent. How large is the loan, how much down?
Our products are a little bit better in the sense of the caps and margins. All my 5/1s are 2.25 margins and lifetime cap of 5%. At 1100 costs are ok, slightly higher than where we would be, but that's fine.
The 750 refinance sounds like a gimmick to get you in the door. Probably does not include fees for title and recording. Also, you are not very likely to refi, but rather likely to move. Lot's of smaller banks and CUs use that gimmick to get the customers in but in the long run there is no value to you as the consumer.
What's a 3/3, did you mean 3/1? In your case, I would not recommend a 3/1 as you are likely to be in the property longer.
Our products are a little bit better in the sense of the caps and margins. All my 5/1s are 2.25 margins and lifetime cap of 5%. At 1100 costs are ok, slightly higher than where we would be, but that's fine.
The 750 refinance sounds like a gimmick to get you in the door. Probably does not include fees for title and recording. Also, you are not very likely to refi, but rather likely to move. Lot's of smaller banks and CUs use that gimmick to get the customers in but in the long run there is no value to you as the consumer.
What's a 3/3, did you mean 3/1? In your case, I would not recommend a 3/1 as you are likely to be in the property longer.
The WI broker had the same thoughts as your re: the 750 thing. I specifically asked the bank. No gimmick. No extra fees. This is not a small bank either.
A 3/3 is a 3 year fixed ARM with a 3 year adjustment period. Not to many folks offer these but they do.
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