Candidate For Rate Shock? Some Suggestions, Maybe Some Comfort

RE:Candidate For Rate Shock? Some Suggestions, Maybe Some Comfort

David — Mon, 20 Nov 2006 13:00:00 GMT

ARMs are an investment tool. Most people don't realize or want to realize that their home is an investment. Investments require monitoring. Most of us cannot afford to make one decision and then allow it to sit for 30 years and hope we have gotten something from it. Lenders have allowed people to get into loans that the homeowner cannot afford. Without good guidance many will lose their homes or be overburdened with extreme payments. Best advice learn what questions to ask?

RE:Candidate For Rate Shock? Some Suggestions, Maybe Some Comfort

Jeff Arnold — Wed, 18 Oct 2006 11:00:00 GMT

One comment on the caps listed in the article. Most "A" paper loans have three caps, not just two (initial, periodic, and life of loan), and unfortunately, many of these have big initial caps (many are 5/1/5, or 6/2/6), meaning that they can adjust upwards of 5% on the first shot. Plug in "5/1 ARM caps" into the search feature on www.efanniemae.com and the first result will show 5/2/5 caps. Your 'relax' advice may not be the best. Folks should check their note to review their caps.

RE:Candidate For Rate Shock? Some Suggestions, Maybe Some Comfort

Pete — Wed, 06 Sep 2006 11:00:00 GMT

Can we not put Interest Only and Option ARMS in the same sentence once and for all! They ARE NOT THE SAME. If we do a simple calculation we'll see that that not much equity would have been realized with a fully amortizing ARM. Not that I am a advocate of either I'd just like to make the point. Thank you.

RE:Candidate For Rate Shock? Some Suggestions, Maybe Some Comfort

Watchdog — Wed, 06 Sep 2006 11:00:00 GMT

One point about subprime ARMs is incorrect. Predominantly, subprime ARMs only adjust upwards. For most subprime loans, the start rate is as low as it will ever go. If you are considering such a loan, request to see the note and applicable ARM rider prior to closing and then comapre to what you see at closing. Most do not provide for the rate to go lower even if market conditions permit. It is an escalator that only goes up.