Adjustable Rate Mortgages
- Thread starter rog1187
- Start date
How long until you'll be able to pay it off? If it'll be a long time until you can pay it off then you may pay higher payments at some point in the future.
Another question would be, how much lower than your current rate would your ARM rate be. Or maybe you're not re-financing but rather just buying.
So, if you can only imagine that they will go up, why in the world would you go the ARM route?
In this current economic environment, bad idea to consider an ARM in 95% of cases in my viewpoint.
Things happen and what if you can't pay it off before the repricing term? With fixed rates so low, one isn't saving a whole bunch with ARM's and the risk benefits are reduced dramatically. But if one wants to assume the large amount of risk for some benefit, then yes it is a personal choice as is with most personal finance decisions.
ARM's are more attractive when the fixed rates are higher and the forecast is going down in the short term. Right now, rates are low with the forecast is going up in the short term. Wrong time for the wrong banking product for most.
Just checking to see if I'm missing something. Never dealt with them in the past, but I was given some rates recently.
Those were sub-prime mortgages with major balloon payments due in 5 years. Not all ARMs are structured that way.
I'll be considering an ARM soon. Mostly I don't like the idea, but it is through a local bank. I'm tired of national banks because I've gotten screwed too many times and I'm getting screwed again now ... on a fixed rate mortgage. Not because of interest rate or anything else.
I pay everything early, so sometimes my mortgage payment is sent in before I ever get the bill. On a couple of occassions my escrow increased so what I sent was no longer enough to cover the new bill. So, they take what I did send and apply it to principle, and as far as they are concerned I never made a payment and still owe for whatever month it is. Shouldn't be a big deal, I call them, send the rest that I owe, they pull the previous payment out of principle, apply the new and all is well.
The first time this happened the difference was only $25. So, I call them, get it all arranged (they want to charge $15 to do a payment over the phone) and send in the $25. They send the money back saying they don't accept partial payments, so I send it again, doing electronic transfer ... 4 times I went through this and by the time somebody actually did their job like they were supposed to, they considered me late on one of my payments and dinged my credit.
I'm in the middle of it happening again now, this time it's $80 extra, and goes back to January. In the middle of the nonsense another national mortgage company took over my loan. Probably 8-10 calls to them and 8-10 different answers and courses of action and it's still not resolved.
It's worth it to me to go to an ARM and work with a local bank where I can go in and talk to somebody and look them in the eye ... and get away from national banks that go out of their way to screw you.
It is good to get advice from those you trust and I will advise be wary from those on a message board and that of course includes myself. One thing you need to be aware of is mortgage brokers (not necessarily banks) will generally make larger commissions selling ARM's. They will market and package an ARM product in order to look out for their best interest and not yours. So be wary.
I can understand the desire to work with a local bank but an Escrow situation as you described can also happen with a local bank and generally does not have a thing to do whether or not you have an ARM or a Fixed-Rate mortgage.
I understand that. But I can walk into the local bank and have it taken care of right then. Instead of a national bank and some anonymous person who doesn't give a shit about their job and doesn't do what they said they'd do when you get off the phone.
In the local bank there will only by maybe 2-3 people that deal with mortgages, so there will be more accountability.
Do you think anybody at Bank of America cares that I called in and Tina didn't do what she said she'd do, and then I called in and Matt didn't either, and then neither did Louise or Sharon? I'd be surprised if any of those 1st tier support people ever work there for more than 3-6 months anyway.
Good point. You will get much better service at a community bank. Even better service and lower rates at a credit union. Bank of America is horrendous. I hate my main credit card is through them but it is the best card for most of use so I hold my nose every month using it.
Make sure that local bank doesn't sell off their mortgages. On 2 occasions I took mortgages through my local credit union, and in both cases the mortgages were sold by the time I went to closing. I didn't really care about that because I really liked the attention to detail that the mortgage group at the credit union put into their job. I figured it didn't matter to me who I was making a payment to, but I wanted to work with people I trusted when initiating the mortgage. You are the flip side of that, so the sale of your mortgage would work against your plan.
I've made sure of that. They hold the mortgages.
That's what concerned me about just doing a refinance with a bigger group. I could do all of that to get away from Bank of America and Carrington Mortgage Services ... and then end up right back with them anyway.
If you have a payback plan under 5 yrs and you are saving multiple points then do it. Beyond 5 years and have a can of lube for your ass just in case.
