[quote=HLS][quote=bearishgurl]n(a true “option ARM” which doesn’t exist today under the former terms), they would have an interest rate today in the 3% range. They would be paying ~3.6% with a 2.5% margin and ~3.85% with a 2.75% margin. In previous years, the COFI index has been as low as .931% (in Sept 14). Those (now few) borrowers still left on the COFI train have been able to take advantage of current low rates without lifting a finger!
after paying 4 years of $150 annual fees and having already paid $600 in annual fees (which almost covered those two “free” RT plane tix I rec’d),
I get 6% cash back in all standalone grocery stores and 3% cash back at all standalone gas stations. Now THAT is my kind of card!
You posted that the opportunity for “no-cost” (to the borrower) mortgage loans may never happen again, HLS. When did they start to “come into vogue” and when do you think they will become unavailable?[/quote]
Options ARMS were promoted by the lowest of the low.
Downey Savings, Country Wide & World Savings were 3 of the most aggressive. AN absolutely disgusting product that paid huge commissions and were ‘weapons of financial mass destruction’
The reps made a small fortune and truly had NO IDEA what they were selling and what the risks were.
I studied them and decided that I would NEVER offer one and I never did.
There was an index + a margin. What most people don’t know is that there were multiple options for the margin.
The higher the margin, the larger the commission.
Many mortgage lowlifes put their friends, relatives, neighbors & clients into OA’s with high margins because of huge commissions & low payments that very few people understood.
As you put it, ‘Lifting a Finger’ could save people tens of thousands of dollars… and have ZERO risk of future rate increases.
NOT LIFTING A FINGER has cost money and there is future risk of rate increase.
Not something I would do OR recommend.
BG, you took a chance that most people shouldn’t take.
In hindsight, assuming that you could qualify, you would have been MUCH better off doing what AN & FLU did, pocketing money all the way down, and today refinancing into a 10 or 15 year rate, FIXED and lower than you are quoting, still variable.
You’d still be on the track you’re on,, with no rate risk. I understand that you can pay it off if you wanted to…I agree with FLU that it makes little sense to be collecting 1% and paying over 3%.
5YR & 7YR ARMS exist today, with a 5% cap; not recommended for someone with a long term horizon.
the lender credits are not as big on ARMS, but the rates are a bit lower
You should have cancelled your AMEX card after the 1st year, the points were already in your Rewards acct if you hadn’t used them. There was no reason to pay 4 years of annual fees.
I believe Preferred Blue has an annual limit at Grocery stores.($6000 spend = $360 rebate limit & $75 annual fee?) Most gas stations charge a premium to use a credit card, what are you really saving ??the Costco option with AMEX ends June 19th.
THAT is NOT my kind of card.
I can save 3%-5% at ARCO AM/PM with credit card… I’d rather get $500 credit my way, I’m glad yours works for you.
I rarely book a hotel room directly, the flexible options at Hotwire & Priceline usually get 4 star rooms (Sheraton, Marriott, Hilton, Hyatt, Suites etc) for the price of Motel 6 or Best Western
Lastly, my comment about will never happen again was referring to the opportunity to refi 5-10 times in a declining interest rate environment as FLU & AN did.
Credits from lender to cover all closing costs have been available for over 10 years but spreads were different.
I don’t see these going away any time soon.
Most people who chose to pay anything for a primary residence loan in the last 5 years probably made a mistake, although some may not of had an option for various reasons.
It’s more difficult to get a rental property loan at no cost because of pricing hits[/quote]HLS, my option ARMs had lower margins (1.75 to 2.5%) which do not exist anymore. None had prepayment penalties (as fixed programs did at the time). The program I am in required a minimum 740 FICO score (mine was 804 at the time) and was only available to prime and Alt-A borrowers. Prior to the MBS’s taking complete control of the mortgage market, there were far more choices in loan products to choose from with great terms. The older Option ARMS for prime borrowers were NEVER an exploding loan with exotic terms and up to 12 points to the lenders/loan brokers (like the toxic products you are mentioning here which were peddled during the “go-go years” by “crooked” mortgage brokers). They were pure Option ARMs which adjusts monthly and during its first five years, it offered 4 and then 3 (by the 5th year, I think) “payment options.” Of course, I ALWAYS SELECTED the fully amortizing payment. If the borrower is not a stupid gambler who ends up with neg am before the first year runs out, Option ARMs are fine. These programs cannot all be painted with the same broad brush. There were GREAT Option ARM programs out there backed by COFI, 1yr T-Bill and LIBOR (I like COFI the best) and nearly all of them had 0 point programs. They typically only cost $2200 to $2800 to close back then for a conforming loan. However ancillary services (escrow, title, etc) have increased in price a lot since then.
Of course, you understand that all those HUGE interest rate resets at the beginning of the 3rd, 6th, 9th or 11th year (even on ARMS offered between 2004 and 2007) were primarily due to STUPID BORROWERS who elected to pay I/O every month (Opt 2) or LESS THAN I/O (Opt 1) and then cry wolf when they had to face the music. That’s insanely stupid and they got no sympathy from me (unless they were English-challenged and got “roped” into taking the loan so the mortgage broker could defraud them out of big chunks of equity at loan closing). Yes, this DID happen numerous times in my neck of the woods.
Just like health insurance, I feel the US mortgage market has far more limited choices to choose from today than it did in prior years/decades …. all due to too much gubment intervention.
I have on occasion used AMEX Travel and Expedia to book a room but I would really prefer the flexibility to change my plans on the day of check-in (due to deciding to stay longer in the previous town/city) without penalty and you can’t do that with those online travel aggregators. You have to pay up front to get the deep discount and then forfeit the amount paid if your plans change.
I know I kept the Gold card too long. I was on “autopilot” until a few weeks before I was to be billed for another year’s annual fees. I guess that’s how they can offer the 2 “free” RT tix to new signups. The members on “autopilot” just pay their annual fee every year whether the card really meets their needs … or doesn’t.
I didn’t know ARCO accepted CC’s, HLS. And I’m only a one-person household (except holidays) so I’ll never hit the $6K AMEX grocery award limit … ever :=0
Oh, and btw, most Best Westerns these days are 4-star hotels. While road tripping, I like to park right outside my room door (motor-lodge setup). I don’t park underground and take elevators to my room unless I’m at a ski-in/ski-out resort and leave my skis in a locker on the ground floor. That’s where the Sheraton, et al, comes in :=]
