[(former)FormerSanDiegan]

Depending on short-term interest rates, these future loan resets may or may not be as much of a problem as advertised. Personally, I think it is being overblown. The Option ARMS are certainly toast, but the other varieties … remains to be seen.

Consider a 5/1 IO ARM loan originating in 2005 at an initial rate of 5.625%.

Typical terms:
Margin : 2.25%
Index: 12-month LIBOR

At today’s LIBOR, this resets to 5.5 %. So, the difference in payment is not 50% as the article states, but more like 20-25%.

It all depends on where the Index rates (these are short-term rates, either 1-year or 6-month treasuries or LIBOR) are upon reset.

[(former)FormerSanDiegan]

Depending on short-term interest rates, these future loan resets may or may not be as much of a problem as advertised. Personally, I think it is being overblown. The Option ARMS are certainly toast, but the other varieties … remains to be seen.

Consider a 5/1 IO ARM loan originating in 2005 at an initial rate of 5.625%.

Typical terms:
Margin : 2.25%
Index: 12-month LIBOR

At today’s LIBOR, this resets to 5.5 %. So, the difference in payment is not 50% as the article states, but more like 20-25%.

It all depends on where the Index rates (these are short-term rates, either 1-year or 6-month treasuries or LIBOR) are upon reset.

[(former)FormerSanDiegan]

[quote=temeculaguy] Curiously, that is what I pay in rent and I can buy my place for 200k. [/quote]

Hey tg, can you arrange for me to buy your pad for 200K ? Heck at a GRM = 125 that’s about the same as Dallas/Fort Worth, but with much lower property tax rates (CA is ~1.2% versus 2 or 3% in Texas), and prop 13 protection. No wonder things have picked up in Temecula.

[(former)FormerSanDiegan]

[quote=temeculaguy] Curiously, that is what I pay in rent and I can buy my place for 200k. [/quote]

Hey tg, can you arrange for me to buy your pad for 200K ? Heck at a GRM = 125 that’s about the same as Dallas/Fort Worth, but with much lower property tax rates (CA is ~1.2% versus 2 or 3% in Texas), and prop 13 protection. No wonder things have picked up in Temecula.

[(former)FormerSanDiegan]

[quote=temeculaguy] Curiously, that is what I pay in rent and I can buy my place for 200k. [/quote]

Hey tg, can you arrange for me to buy your pad for 200K ? Heck at a GRM = 125 that’s about the same as Dallas/Fort Worth, but with much lower property tax rates (CA is ~1.2% versus 2 or 3% in Texas), and prop 13 protection. No wonder things have picked up in Temecula.

[(former)FormerSanDiegan]

[quote=temeculaguy] Curiously, that is what I pay in rent and I can buy my place for 200k. [/quote]

Hey tg, can you arrange for me to buy your pad for 200K ? Heck at a GRM = 125 that’s about the same as Dallas/Fort Worth, but with much lower property tax rates (CA is ~1.2% versus 2 or 3% in Texas), and prop 13 protection. No wonder things have picked up in Temecula.

[(former)FormerSanDiegan]

[quote=temeculaguy] Curiously, that is what I pay in rent and I can buy my place for 200k. [/quote]

Hey tg, can you arrange for me to buy your pad for 200K ? Heck at a GRM = 125 that’s about the same as Dallas/Fort Worth, but with much lower property tax rates (CA is ~1.2% versus 2 or 3% in Texas), and prop 13 protection. No wonder things have picked up in Temecula.

[(former)FormerSanDiegan]

Here’s my advice …

If
(You can find a place you want, where you want,
that you can conservatively afford 20% down,
30-year fixed and you plan on living there for
the next decade)

and
(You could conceivably rent it out and break
even, if your economic situation or plans
change.)

Then,
Pull the trigger

Else,
Wait

[(former)FormerSanDiegan]

Here’s my advice …

If
(You can find a place you want, where you want,
that you can conservatively afford 20% down,
30-year fixed and you plan on living there for
the next decade)

and
(You could conceivably rent it out and break
even, if your economic situation or plans
change.)

Then,
Pull the trigger

Else,
Wait

[(former)FormerSanDiegan]

Here’s my advice …

If
(You can find a place you want, where you want,
that you can conservatively afford 20% down,
30-year fixed and you plan on living there for
the next decade)

and
(You could conceivably rent it out and break
even, if your economic situation or plans
change.)

Then,
Pull the trigger

Else,
Wait

[(former)FormerSanDiegan]

Here’s my advice …

If
(You can find a place you want, where you want,
that you can conservatively afford 20% down,
30-year fixed and you plan on living there for
the next decade)

and
(You could conceivably rent it out and break
even, if your economic situation or plans
change.)

Then,
Pull the trigger

Else,
Wait

[(former)FormerSanDiegan]

Here’s my advice …

If
(You can find a place you want, where you want,
that you can conservatively afford 20% down,
30-year fixed and you plan on living there for
the next decade)

and
(You could conceivably rent it out and break
even, if your economic situation or plans
change.)

Then,
Pull the trigger

Else,
Wait

[(former)FormerSanDiegan]

something besides Football to talk about

Huh? There’s something besides football to talk about ? Hard to believe … Oh well, back to SportsCenter …

[(former)FormerSanDiegan]

something besides Football to talk about

Huh? There’s something besides football to talk about ? Hard to believe … Oh well, back to SportsCenter …

[(former)FormerSanDiegan]

something besides Football to talk about

Huh? There’s something besides football to talk about ? Hard to believe … Oh well, back to SportsCenter …

[Author]

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