Mortgage Lies and Truths

[cr]

HLS/Rustico/FSD,

I agree it’s quite an open ended question, and I can see how one could benefit from FSD’s situation. I am planning to do a 15yr fixed when I buy, because I envision rates going up, and don’t expect to double my income after I buy within 3 years. 4 maybe :), and I would prefer not to sell, at least until the next bubble.

But I want to make sure my reasoning to go with a fixed is solid, which gets back the original post.

I view ARMs/IO as a way to get more house than you can afford. Omitting the option of selling after rates/payments adjust what would make those worthwhile? A huge increase in pay is about the only likely thing I can think of, and that’s not a guarantee. If you’re not moving, can’t sell or refi (and cover the original loan) because the value went down, shouldn’t you go fixed?

There may be benefits, but with unknown rate changes it’s too convuluded to determine the long run cost comparison. I imagine you would have to have a higher ROI than the highest your mortgage rate could go. That’s the only thing I could see making your money saved with an ARM/IO worth more than paying off a house and having the money later. That of course assumes you could afford a fixed at the time of purchase, and actually invest the savings. Then again, with a higher rate, you may be paying a lot more on the full term than with a fixed.

My buddy is a broker in SD. I’ll ask hi if ARM/IO’s were higher commissions.

[cr]

HLS/Rustico/FSD,

I agree it’s quite an open ended question, and I can see how one could benefit from FSD’s situation. I am planning to do a 15yr fixed when I buy, because I envision rates going up, and don’t expect to double my income after I buy within 3 years. 4 maybe :), and I would prefer not to sell, at least until the next bubble.

But I want to make sure my reasoning to go with a fixed is solid, which gets back the original post.

I view ARMs/IO as a way to get more house than you can afford. Omitting the option of selling after rates/payments adjust what would make those worthwhile? A huge increase in pay is about the only likely thing I can think of, and that’s not a guarantee. If you’re not moving, can’t sell or refi (and cover the original loan) because the value went down, shouldn’t you go fixed?

There may be benefits, but with unknown rate changes it’s too convuluded to determine the long run cost comparison. I imagine you would have to have a higher ROI than the highest your mortgage rate could go. That’s the only thing I could see making your money saved with an ARM/IO worth more than paying off a house and having the money later. That of course assumes you could afford a fixed at the time of purchase, and actually invest the savings. Then again, with a higher rate, you may be paying a lot more on the full term than with a fixed.

My buddy is a broker in SD. I’ll ask hi if ARM/IO’s were higher commissions.

[NotCranky]

“My buddy is a broker in SD. I’ll ask hi if ARM/IO’s were higher commissions.”

Keep in mind that at times they are selling what they can sell, with attention to volume not reward per loan originated. If it were not for “exotic” loans there would not have been a FB across the table with pen. This may be the case with the interest only currently as well.

[NotCranky]

“My buddy is a broker in SD. I’ll ask hi if ARM/IO’s were higher commissions.”

Keep in mind that at times they are selling what they can sell, with attention to volume not reward per loan originated. If it were not for “exotic” loans there would not have been a FB across the table with pen. This may be the case with the interest only currently as well.

[HLS]

%$#!@!(*&* I AM NOT TOUTING THEM,
(exclusively ?? that’s FUNNY)

I simply stated that they should be CONSIDERED and can be helpful.
It makes NO DIFFERENCE to me what loan someone gets.

I’m tired of TRYING to tell the truth. Maybe I should just be like the 99 others and lie to all of you, then you will be happy.

HERE YA GO: Interest only loans are TERRIBLE. Don’t ever get one. You should only get a 15 YR fully amortized loan. Pay extra EVERY payment. If you cannot afford to, you are a loser and shouldn’t live in this area. Go to a bank. Believe what the $8 an hour employee tells you. They ALL have great loans and can discuss your financila situation
with you. They have BANK CD’s, and BANK savings accounts.

Have fun with your conspiracy theories.
You’ve proved your point. People don’t want the truth.

[HLS]

%$#!@!(*&* I AM NOT TOUTING THEM,
(exclusively ?? that’s FUNNY)

I simply stated that they should be CONSIDERED and can be helpful.
It makes NO DIFFERENCE to me what loan someone gets.

I’m tired of TRYING to tell the truth. Maybe I should just be like the 99 others and lie to all of you, then you will be happy.

HERE YA GO: Interest only loans are TERRIBLE. Don’t ever get one. You should only get a 15 YR fully amortized loan. Pay extra EVERY payment. If you cannot afford to, you are a loser and shouldn’t live in this area. Go to a bank. Believe what the $8 an hour employee tells you. They ALL have great loans and can discuss your financila situation
with you. They have BANK CD’s, and BANK savings accounts.

Have fun with your conspiracy theories.
You’ve proved your point. People don’t want the truth.

[NotCranky]

Good luck to you cooprider, what ever you do.

[NotCranky]

Good luck to you cooprider, what ever you do.

[ucodegen]

Hmmm. I’ve never been called — NorthCountyMan
I tell people make sure you trust your lender and your broker….so there.

You may want to rephrase this to:
Only use a lender and broker that you can trust.
It is not good to trust someone when the trust is misplaced.

[ucodegen]

Hmmm. I’ve never been called — NorthCountyMan
I tell people make sure you trust your lender and your broker….so there.

You may want to rephrase this to:
Only use a lender and broker that you can trust.
It is not good to trust someone when the trust is misplaced.

[Arraya]

Mortgage selection is a balance of short term comfort and long term financial goals.

Everybody is different hence the vast array of mortgage options.

Unfortunately many people misuse the lower cost options for excessive consumption…

Whattaya gonna do?

[Arraya]

Mortgage selection is a balance of short term comfort and long term financial goals.

Everybody is different hence the vast array of mortgage options.

Unfortunately many people misuse the lower cost options for excessive consumption…

Whattaya gonna do?

[barnaby33]

Unfortunately many people misuse the lower cost options for excessive consumption…

Whattaya gonna do?

Short the shit out of LEND and CFC and laugh when the market dictates that lots of these loans are bad.

HLS, you make a very good point, but its too subtle and not contextually sensitive enough. No loan by itself is evil, but when you give J6P the ability to do something stupid that benefits himself in the short term at a huge long term cost, he will.

Its hard to believe a former loan officer doesn’t understand todays products, but hey its possible. What annoys me is like many new posters he just asks a question without having read the bubble primer and some threads first.

Josh

[barnaby33]

Unfortunately many people misuse the lower cost options for excessive consumption…

Whattaya gonna do?

Short the shit out of LEND and CFC and laugh when the market dictates that lots of these loans are bad.

HLS, you make a very good point, but its too subtle and not contextually sensitive enough. No loan by itself is evil, but when you give J6P the ability to do something stupid that benefits himself in the short term at a huge long term cost, he will.

Its hard to believe a former loan officer doesn’t understand todays products, but hey its possible. What annoys me is like many new posters he just asks a question without having read the bubble primer and some threads first.

Josh

[sdrealtor]

Hey Josh,
Been to Jamul lately;)
sdr

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