Is anyone here-

Nephythys · 03-20-2007, 10:45 AM

Conversant and knowledgeable about mortgages?

Ghoulish Delight · 03-20-2007, 10:50 AM

I am to a point. What's your question?

Snowflake · 03-20-2007, 10:54 AM

Sorry Nephy, I can't help you here.

Clueless.

Nephythys · 03-20-2007, 11:09 AM

Ok-
I have never had a home before so when we got into the first mortgage I did not understand it all-

We have an 80/20
The 80 is an adjustable rate balloon. So not only does the rate increase, but the note comes due in 30 years. That would mean 15 years worth of payments at the end of that term
Ouch.
Refinancing this loan before 24 months carries a 6 month interest penalty.

The 20 is a 30 year fixed- just at a higher rate. Can do a re-fi anytime, no penalty.

We also have a small home improvement loan for the new windows we put in. 7 years, no penalty for pre-payment.

I have been working with someone on a re-fi- I wanted to get money out of it (if possible) to consolidate debt but it looks like a no go- here is what she came back with.

1st $167250
30 year fixed
6.875%
interest only payments $958.00 (for 10 years)
includes the 6 month penalty on the old loan- new loan has no penalty for prepayment

2nd $43000
11%
fixed for 7 years
interest only $394
includes home improvement loan (and works as a line of credit, I can pay it off and re-draw from it)

$1598.00 new payment
$1754.00 old payment

$156 per month savings

I told a friend at work whose husband works (or used to) in the industry and she said an interest only is bad. That I will lose (or not gain) equity in my home and that when the interest only ends I will get bit with a huge change in payments. She said it is good for short term homes, but not for one you will live in for a long time.

I know nothing about them-and I am more baffled now than ever.

Is this going from bad to just slightly less bad- or is it a step in the right direction?

mousepod · 03-20-2007, 11:20 AM

Hey Neph,

Since Heather and I are planning on jumping into the homeowner pool soon, we picked up this book

.

I've learned a lot from it, and recommend it as a way to demystify the double-talk you hear from so many lenders.

Hope this helps.

(Love your posts. Hate your sig line.)

Nephythys · 03-20-2007, 11:25 AM

Thanks MP.

I understand not liking my sig line- I don't like liberal politics and the dems in congress.

I will look for something new-but I'm picky.

Ghoulish Delight · 03-20-2007, 11:35 AM

Generally, interest-only is not worth it. And at $150/month difference, I'd say definitely not. You will be gaining zero equity, and at the end of the 10 years you will have the same principle to pay, except now you only have 20 years to pay it instead of 30, so you can guess what that does to your payments.

You're probably better off at this point making do until you pass the 24 month penalty period. You'll have saved up some equity and will likely be able to get a better deal.

Nephythys · 03-20-2007, 11:56 AM

Speaking to the loan lady-

30 year fixed
NOT an Option ARM

I would continue to gain equity- by paying down or home gaining value.

I paid $189k- homes are selling in my area for $223k

At the end of the 10 years (interest only term) my loan would be reamortized over the remaining 20 years. So let's say I never paid anything but interest and reached 10 years- my payment would change to $1284 (only around $300 difference)- but only if I don't re-fi or pay on the principal.

This won't adjust on me-rate locked for 30 years. Equity in the home at 95% financing.

(and quick reply doesn't work

)

If we did principal/interest most of it would go to interest anyway.

Ghoulish Delight · 03-20-2007, 12:13 PM

And how much will you be paying in fees to refinance now, and refinance again 10 years down the line? That's money you aren't going to see again.

Yes, most of it goes to interest anyway, but do you know how much "most" is? We also have an 80/20 loan, and on the first mortgage, more than 10% of my payment goes towards principle. If yours is anything close to that, you're paying yourself near the $150 difference every month anyway.

So unless you really need to have the money in hand right now, the best long term strategy is to stay the course until you can find something that doesn't involve interest-only.

(and I have no freaking clue why quick reply seems to be getting worse, no one's been able to even suggest possible reasons)

Nephythys · 03-20-2007, 12:25 PM

I will get no money in hand by doing this.

I am not doing debt consolidation with it.
It is not an ARM- will not adjust.

Thanks for all the input though- I am learning as I go. I do appreciate it.

03-20-2007, 10:45 AM	#1
Nephythys Yeah, that's about it- Join Date: Jan 2005 Location: In a state of constant crap to get done Posts: 2,688	Is anyone here- Conversant and knowledgeable about mortgages?
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03-20-2007, 10:50 AM	#2
Ghoulish Delight I Floop the Pig Join Date: Jan 2005 Location: Alternative Swankstyle Posts: 19,348	I am to a point. What's your question? __________________ 'He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me.' -TJ
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03-20-2007, 10:54 AM	#3
Snowflake lost in the fog Join Date: Jul 2005 Location: San Francisco Posts: 7,831	Sorry Nephy, I can't help you here. Clueless. __________________ Be yourself; everyone else is already taken. - Oscar Wilde
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03-20-2007, 11:09 AM	#4
Nephythys Yeah, that's about it- Join Date: Jan 2005 Location: In a state of constant crap to get done Posts: 2,688	Ok- I have never had a home before so when we got into the first mortgage I did not understand it all- We have an 80/20 The 80 is an adjustable rate balloon. So not only does the rate increase, but the note comes due in 30 years. That would mean 15 years worth of payments at the end of that term Ouch. Refinancing this loan before 24 months carries a 6 month interest penalty. The 20 is a 30 year fixed- just at a higher rate. Can do a re-fi anytime, no penalty. We also have a small home improvement loan for the new windows we put in. 7 years, no penalty for pre-payment. I have been working with someone on a re-fi- I wanted to get money out of it (if possible) to consolidate debt but it looks like a no go- here is what she came back with. 1st $167250 30 year fixed 6.875% interest only payments $958.00 (for 10 years) includes the 6 month penalty on the old loan- new loan has no penalty for prepayment 2nd $43000 11% fixed for 7 years interest only $394 includes home improvement loan (and works as a line of credit, I can pay it off and re-draw from it) $1598.00 new payment $1754.00 old payment $156 per month savings I told a friend at work whose husband works (or used to) in the industry and she said an interest only is bad. That I will lose (or not gain) equity in my home and that when the interest only ends I will get bit with a huge change in payments. She said it is good for short term homes, but not for one you will live in for a long time. I know nothing about them-and I am more baffled now than ever. Is this going from bad to just slightly less bad- or is it a step in the right direction?
	Submit to Quotes

03-20-2007, 11:20 AM	#5
mousepod You broke your Ramadar! Join Date: Jan 2005 Posts: 4,635	Hey Neph, Since Heather and I are planning on jumping into the homeowner pool soon, we picked up this book . I've learned a lot from it, and recommend it as a way to demystify the double-talk you hear from so many lenders. Hope this helps. (Love your posts. Hate your sig line.) __________________ "Give the public everything you can give them, keep the place as clean as you can keep it, keep it friendly" - Walt Disney
	Submit to Quotes

03-20-2007, 11:25 AM	#6
Nephythys Yeah, that's about it- Join Date: Jan 2005 Location: In a state of constant crap to get done Posts: 2,688	Thanks MP. I understand not liking my sig line- I don't like liberal politics and the dems in congress. I will look for something new-but I'm picky.
	Submit to Quotes

03-20-2007, 11:35 AM	#7
Ghoulish Delight I Floop the Pig Join Date: Jan 2005 Location: Alternative Swankstyle Posts: 19,348	Generally, interest-only is not worth it. And at $150/month difference, I'd say definitely not. You will be gaining zero equity, and at the end of the 10 years you will have the same principle to pay, except now you only have 20 years to pay it instead of 30, so you can guess what that does to your payments. You're probably better off at this point making do until you pass the 24 month penalty period. You'll have saved up some equity and will likely be able to get a better deal. __________________ 'He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me.' -TJ
	Submit to Quotes

03-20-2007, 11:56 AM	#8
Nephythys Yeah, that's about it- Join Date: Jan 2005 Location: In a state of constant crap to get done Posts: 2,688	Speaking to the loan lady- 30 year fixed NOT an Option ARM I would continue to gain equity- by paying down or home gaining value. I paid $189k- homes are selling in my area for $223k At the end of the 10 years (interest only term) my loan would be reamortized over the remaining 20 years. So let's say I never paid anything but interest and reached 10 years- my payment would change to $1284 (only around $300 difference)- but only if I don't re-fi or pay on the principal. This won't adjust on me-rate locked for 30 years. Equity in the home at 95% financing. (and quick reply doesn't work ) If we did principal/interest most of it would go to interest anyway.
	Submit to Quotes

03-20-2007, 12:13 PM	#9
Ghoulish Delight I Floop the Pig Join Date: Jan 2005 Location: Alternative Swankstyle Posts: 19,348	And how much will you be paying in fees to refinance now, and refinance again 10 years down the line? That's money you aren't going to see again. Yes, most of it goes to interest anyway, but do you know how much "most" is? We also have an 80/20 loan, and on the first mortgage, more than 10% of my payment goes towards principle. If yours is anything close to that, you're paying yourself near the $150 difference every month anyway. So unless you really need to have the money in hand right now, the best long term strategy is to stay the course until you can find something that doesn't involve interest-only. (and I have no freaking clue why quick reply seems to be getting worse, no one's been able to even suggest possible reasons) __________________ 'He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me.' -TJ
	Submit to Quotes

03-20-2007, 12:25 PM	#10
Nephythys Yeah, that's about it- Join Date: Jan 2005 Location: In a state of constant crap to get done Posts: 2,688	I will get no money in hand by doing this. I am not doing debt consolidation with it. It is not an ARM- will not adjust. Thanks for all the input though- I am learning as I go. I do appreciate it.
	Submit to Quotes