Hi all: Trying to get some advice on a refinance. We've been told by our real estate broker/loan agent/shark/local strongman (just kidding) that he's going to give us the 'best deal' on a 2/28 ARM. I've never heard of this, but then again, I'm green as to real estate workings. Basically, he's refinancing our 3 mortgages of 224K worth of debt: --> 1st Mortgage: $160K, 7.75%, 30 year fixed - (VA) --> 1st Lien: $43K, 12.24%, 15 year fixed (Home Imp/EQ) --> 2nd Lien: $17K, 10.5%, 10 year fixed (Home Imp/EQ) And combining those into this 2/28 ARM: --> Loan: $228K at 8.25% He's wrapping all closing costs, points, fees, etc into the loan (hence the $4K diff). Heck, he's even fronting the appraisal fee. It's an 80% LTV btw on $280 appraised. My credit: 520 on Privacy Guard. Wife's is only slightly higher. Couple of 30 day lates on all 3 mortgages past year. He explained that this 'band-aid' refinance will help us improve our credit and qualify us for even better financing in several years (2). Anyhow, bottom line is: (1) is this a good deal (2) what happens at 24 months (3) are ARM's good ideas right now? Anyone? Thanks! Nex
I was offered 7.5% on 80% with a 580 middle score. I would try goodwill letters to your slow pays and see if they will remove to raise your score. The scary thing about a 2/28 is that in 2 yrs the rate could be higher. I am trying to raise my DH's score as well as my own to get 620 to 640. Best of luck!
With rates increasing over the last few weeks, I don't know that I would personally go with an ARM. I would try conventional first. You may want to work with a broker, they usually have more options than a mortgage co or bank. Michelle
You have three mortgages on your home, and you have credit scores in the 500's? Run, don't walk, to a bankruptcy attorney. Why put a band-aid on the problem?
Re: Re: Mortgage whizzes: is this good? More useless advice from TooMuch. What is your total financial situation? Why the lates?? If you think rates will be substantially higher in 2 years, avoid the adjustable mortgage. Adjustables are dangerous in a rising interest rate environment. WALLST
Re: Re: Re: Mortgage whizzes: is this good? Ummm, you really need more information than that to know they're bankrupt? The three mortgages alone haven't given them low credit scores. They either have a lot of late payments, charge offs, or an extremely heavy unsecured debt load. In any case, getting an 8% refi isn't the answer. It's just a band-aid to hide the real problem.
Re: Re: Re: Mortgage whizzes: is this good? You have a weighted average interest rate now of 8.53%. Your proposed new mortgage would be less than that. You do the logic. What happens in 2 years? Your Ouija board is just as good as mine. Is a variable mortgage a good thing at this time? Depends on how long this lower rate is locked in for, how fast the rate can go up, what the maximum increase is per adjustment and over the life of the loan, then compare that with what you have now.
Appreciate the overall comments, but a few questions/comments back at cha: (1) I won't file bankruptcy. I know all of my faults, and intend to remedy those worth the effort; fix the behavior that causes these problems overall, and attempt to make strategic decisions now to get myself to A PAPER as soon as possible; (2) What is a weighted loan average? And if my new refi is lower than that, it's a "good thing", correct? (3) I could just do a streamline refinance on my VA mortage, and probably lock in 6.5 on just my $160K VA loan. Pay that as agreed, and in two years, do a refi with better credit for the going rate for all three mortgages. I would save $150 in the interim on my monthly payments for the VA in return. (4) I could do the 2/28 ARM now, and attempt to refi in 18 months. Things including the valuation of my area I live in, the interest rates bank to bank (LIBOR), as well as other things -- the ouija board looks cloudy. I don't have the ability to fully understand the risk. I know the 2/28 ARM could go as high as 1.5 points every 6 months to a max of 7 % points over loan (which would be then total: 15.25%). That's scary.
1) Good, keep working on identifying why you're overspending. That's the hardest part of solving a debt crisis. 2)Weighted loan average is the average interest rate on all your loans, factoring in the $ amounts of each of them. 3) I'm not sure you could do a streamline VA refi with a 2nd and 3rd note on the property. Maybe someone else here knows if it's possible. I thought the VA had a rule against that. However, if it's possible, I would go that route, and then put all your extra $$$ toward paying down your higher interet rate debt. Then, when your credit improves, look at refinancing the remaining balances at a lower rate. In any case, I would NEVER trade that VA loan for a conventional mortgage. There are too many protections provided to you by the VA. You don't want to lose them. You've had debt problems in the past, and you never know what may come your way in the future. If you get into a jam, you may need the protection that the VA gives you when it comes to foreclosure, etc. 4) Rates are going higher...much higher. However, they aren't likely to get above 8% in the next 18 months. So, if you can accomplish the above within that time frame, you'd still be ok to refi the remaining debt at a lower rate when your credit improves.
I'm refinancing from 25 to 20 yr note 5.75% fixed....balance of 67k, appraisal of 95k Heloc also being refinanced with current lender variable @ 6.7% currently. Does VA not offer fixed rates? If you feel like you'll be able to refinance if the rates go up (work on fixing up the credit report) in the future then I guess it's good. I don't like ARM's as rates change and can go up.
I think after hearing what everyone has to say on this, I'm going to go with the VA IRRRL (Streamline refinance). I'm going to save an equivalent amount of money a month in the refi (it'll go way lower than the 8.25% for the 3-loan consolidation), and I'll have the VA guarantee behind it, and it's fixed 30yrs. Plus, I'm squeezing in a $6K money reimbursement for 'energy improvements'. Thanks for all of the good advice here! Nex
