Posted by ME/NJ on 11/3/11 12:45pm
Msg #402674

Saw my first ARM loan since 2007

I cannot believe anyone would take this type loan ever again. 5/1 the rate was 2.1%, also HELOCs are back again did 10 in the last month of the ten 5 were piggybacks.

Reply by SheilaSJCA on 11/3/11 12:53pm
Msg #402676

ARMS have never gone away in my area

they did die down for several months, back when the banking fiasco exploded on the scene, but gradually came back, I see at least one a week.

Reply by Linda Juenger on 11/3/11 1:04pm
Msg #402677

Re: ARMS have never gone away in my area

I see them from time to time also. If it helps someone out for 5 years, that's great. Never know the circumstances surrounding this. Don't be quick to judge.

Reply by NJDiva on 11/3/11 1:10pm
Msg #402678

I've been seeing them for a few months now...

I, too, was very surprised. I did one yesterday. They definitely seem to be coming back. Also agree about the HELOC's.

Reply by Scriba/NM on 11/3/11 1:13pm
Msg #402679

Everyone has a reason for what they do. Real estate prices are deflated and believe it or not there are still "flippers" out there. I had one last week. It takes a lot longer, but they now have five years to make smaller payments while fixing up a "not so good property" that they picked up for $50,000 less than it sold for a couple of years ago. sort of like gambling - they're betting they can fix it up and sell it and make a profit.

And, there are people that want to improve their property - one way they can do is through a HELOC. I've been seeing them pop up about once every three weeks.

Reply by ME/NJ on 11/3/11 1:17pm
Msg #402680

My own horror story about ARMs

I had a 5/1 deal with 3% start, the term was up and rates went up 19xs since I signed the deal.
My 1500/month deal went up to 3300/month. This was 2006 the start of the down turn, lucky for me being in this business with connections I was able to get a very low 30 year fix and had 20% equity.

Now it's 2011 I am 75K upside down on my home thanks to all the foreclosures and low bank sales, I will be lucky if I break even now in ten years.

Now anyone who does a ARM now is nuts, 2% more on a 30 year fix will not break the bank, and what direction do you think rates will go in the next 5 years UP UP UP. Sorry when homes made money you could take a chance on a ARM, not now that is what got us into the mess.

Reply by NJDiva on 11/3/11 1:31pm
Msg #402683

AMEN Mike! You & I had a very similar circumstance...

Come to think of it, I think it was 2006!!! Who was your broker??? tee hee Just kidding.

Reply by Jack/AL on 11/3/11 1:46pm
Msg #402685

I saw one that made since!

Just last week, I did a signing for two physicians. Their beginning rate was 2.75%. The monthly payment they actually make is more than 3.2 times the required payment! They've been making such large payments, and will continue to do so. Their whole intent is to just have the lowest interest rate they can get for the small number of years they'll be paying. That makes sense to me...........

Reply by Linda Juenger on 11/3/11 2:24pm
Msg #402689

Re: I saw one that made since!

see Jack, some people actually KNOW what they are doing. Prime example here.

Reply by JanetK_CA on 11/3/11 2:40pm
Msg #402693

Re: I saw one that made since!

I agree. I've seen several ARMs over the past 6 - 9 months, mostly high-income people with expensive homes - and plenty of equity, in most cases. Probably the most common one I've seen is the 10-year fixed. If they plan to sell (or refi again) before the fixed rate period ends, they can save themselves thousands in interest.

Lots of people got into trouble because they followed that theory, but when it came time to refinance, they couldn't qualify. Who knows what the future will bring, but the ones I see appear to be with pretty savvy borrowers these days, unlike back in the boom years.

By far, though, the most common refi I see lately is for people (with strong financials) reducing their interest rate and/or shortening the term. I see more 10- and 15-year fixed than anything else. (And I'd bet more than half of the refi's I do these days are for engineers... oy vey! )

Reply by Jack/AL on 11/4/11 11:41am
Msg #402787

PS - they'll have it paid off before the rate can increase! n/m

Reply by Linda_H/FL on 11/3/11 2:41pm
Msg #402694

We actually looked into that not so long ago

2.75% - would drop us from our current 3.75% - no points - would have cut our monthly mortgage payment virtually in half AND we could have paid off the credit card debt ..

We decided to tough it out and stick with our 3.75% equity line rather than refi and start the P&I cycle all over again with more toward interest than principal.

Gotta say though - those numbers were pretty tempting.

Reply by Linda_H/FL on 11/3/11 2:42pm
Msg #402696

Should add here..another factor that decided it for us

was right now, the way it's structured, we pay a boatload toward our principal right off the bat. I kind of like that

Reply by MW/VA on 11/3/11 6:37pm
Msg #402729

I see them fairly often--streamline VA refi's. The trick is

that they can only be solicited if they can be offered lower rate & lower payment. An ARM accomplishes that. It might not be a bad deal if they're going to be relocated anyway.