Adjustable Rate Mortgages
known as ARM Loans for homes
----------------------
by C A (Miller) Eld
Why do some new home buyers end up in an adjustable rate mortgage (ARM) loan?
Plainly advertised at very low start rates, these loans help the debt heavy borrower, or bulky
payment candidates whose eyes are bigger that their wallets, sqeeze into qualifying for their
new home loan, that otherwise they would not have qualified for.
To debt-ratio the folks with some debt and or larger than normal house payment estimate,
the mortgage broker has little room to play when money sources' guidelines dictate the ratio
acceptable to their loan programs. Therewith, this leaves another avenue of approach, the
intitial interest rate a loan begins it amortization journey with may be lowered intentionally to
attract mortgage brokers in the field to notice a "teaser-rate" opportunity to shrink the house
payment a while, ease them into owning. As well, the ratio figures line up now that the incredibly
low interest rate starts of the series of house payments.
The "teaser-rate" has an unfortunate ending at the contract specified date usually one-year
after closing, sometimes only 6-months and rolls to an adjustable rate mortgage on the home.
Now, the home loan is in an ARM. No biggy if the details are discovered early enough to do a
little homework on the ARM home loans. Usually excited nervous home buyers don't sweat any
of the financing details. The color choice of the wallpaper and curtains maybe, but not the
financing.
The little details of importance are: the marging, the index, the ceiling the hikes to the rate,
the timing of adjustment (every 6-months, every year?). What these are will soon be known to
you.
The margin is a fixed integer number with decimal and some percentage of a whole number.
I offer the example of: 5.55 or 2.50 or 6.75. This little goodie is obviously advertised to your
mortgage broker and he/she should know what a margin on an ARM is, but may skip over telling
you about what a margin on an ARM can or can't do for you the home buying prospect.
Margins are important because they attach to the index-rate. Together the form "the rate"
that your home loan is based on. One changes the other does not ever change on this loan once
it is closed and funded. Guess which does not ever change? The margin does not ever change.
The index floats and has been historically tracked and its history is openly documented. An index
currently down is bound to float up. The tallest spike in the index histogram is achievable again
and when,,,,well most of us wouldn't know. So a Libor index on a 6.00 margin at a cap of 16.50
with a teaser rate of 5.25 for the first year of the loan, looks attractive for the entry and
powerfully dismal thereafter. If the Libor index is floating at about 5.125 then the rate at time of
adjustment will roll to 11.125, then in 6-months or one-year (depending on the loan program),
Libor index is hovering around 3.75, what will the rate be this time when it rolls (adjusts) - 9.75 -
correct. What could the loan rate jump up to as it rises and rises and rises? 16.50 is where it
should cap. Does that make you a little nervous about this loan. Does me.
Indexes used come in a variety of national and international economies. The European
trends usually are more non-casual and fast changing. The London Interbank Offering Rate is
termed Libor. It ossillates from 4 to 6 percent most of the time. The COFI index is a nice slow
moving trend adjuster. The Cost of Funds Index is really small and conservative as its history
trends will show you. The COFI hovers between 2.5 and 4.5 and never leaps much at one time
when it does move. They float they are macoeconomically sensitive to the US economy and the
International economies. They will constitute the variable half of the ARM interest rate. Whereas
the "margin" constitutes the fixed half of the ARM interest rate on a home loan.
For REVIEW: A new mortgage loan presented as an ARM with a marging = 3.00 and floating
on the COFI Index, with a rate cap of 9.00, and a 'teaser rate" of 5.75% for the first 12-months of
the loan, with no points needed to buy down the initial startrate; sounds like a pretty fair deal.
Doesn't it?
Happy Home Buying,
yours truly,
**************************************
Cheryl A MillerEldWeb Content Editor/Blogmaster
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---------------------------------------------------------
UNTOLD FACTS ON BUYING ON A
VA Loan:
------------------------------------------------
by C A MillerEld
A VA Loan is a fabulous benefit to use on your home purchase for veterans. And it has its true advantages. However I was disturbed by some lack of details left out on some sites advertising these loans. So fully understanding the process before you begin qualifying for the loan would be nice to know.
Yes pre-qualify that is fine. You can pre-qualify yourselves by taking all gross incomes of the buyers and taking 42% of it which will be the allowable house payment and its impounds paid monthly with the monthly house payment.
Your interest rate (on articles I read) was to be below market rates by 1/2 to 1.0 less. Not totally true. The rate can be where your lender tells you "You Qualify" which is hogwash. The lender will be happy to get you the absolute lowest possible rate if he/she is taken care of commission wise. They get paid more the higher they get away with convincing you the rate on your deal is XXX and you believe this and sign your note and deed of trust paperwork therefore closing the process on that believed to be the best rate you qualified for.
Not knowing the contrary is not common knowledge. Don't feel bad if you've done this and bypassed opportunity for much lower house payments in so doing. The gift of experience is what I am passing on to you here.
VA Loans require VA Appraisors to evaluate the the homes market value when you hire them to look at your prospective home to be purchased.
The thing is NOT to have an offer written on the home prior to this appraisers findings because if so and if the value he/she writes the market value to be must be below the price you were offering to pay or else YOU will get to pay the difference of your offer and market value below your offer. The sellers will not appreciate revoking the offer they've already accepted from you. So market value above an offer on the table is fine. You don't want the value to come back lower. Money paid over and above the VA appraisors value will be like a required down payment of cash. JUST LIKE A Down Payment. So leave it in the AIR and don't rush to offer a particular offering-price you will pay, until that appraisor is finished writing the evaluation on that property, giving their opinion of its market value.
The "Price" of a home up for sale even being stated prior to the appraisal being done is fantasy or dreamland really. The owners say they want $450k and the buyers think it will be worth their while to offer $425k and the appraisal comes in at a conservative $389k. Well if the contract is that their buying it for $425, what they offered the sellers, the difference between the $389 and the $425 will be made up by the buying participants in that it will be cash down they come to the closing table with because the VA Lender can't exceed VA Appraisal Value in their financing amount.
Sellers can help with some closing costs, and in so doing you will best pay your loan officer points above the normal origination fee with some of the sellers gratuitous closing cost help and buy down to the lowest rate possible.
Don't play games here.
The loan officer works very hard and puts in a ton of hours getting the i's dotted for you on your home loan. It is not an easy job to meet the demands of their loan underwriters and meeting deadlines and timelines required is very intensive work on the part of your loan processing people. So let them enjoy good compensation-they do deserve. Realtor's wine and cry insults at the meager points charged by lenders...exasberated like they were paying it themselves on their contractee's home purchase.
This is why lenders are reluctant to disclose on the front-side any points for themselves to be paid from, and instead mess with your mind a little on why the interest rate was higher than expected.
When really it is so to have back-side points rebated back to the lender from which the loan processing/loan officer can be paid from. To mitigate agressive snivelling Realtors- whose business it is not - anyway. Yep. Realtors have found their way to recking economies and greed based practices form the center of the fall of the market here that we suffer now.
More about "that" later,,,
Hoping to be helpful, yours truly, C A MillerEld
6-14-2011
??? Negotiate Skillfully or Psychically ???
"Both!!"
"The shortest article I've ever written." by CAMillerEld
_______________________________________________________________
May 22,2011,by: Cheryl MillerEld, webmaster/web content writer/blogmaster
_______________________________________________________________
Adjustable Rate Mortgages
known as ARM Loans for homes
by CA MillerEld
The loan everybody said !!NOT!! to get, said the home loan prospect and first-time-home
buyer.
I was sitting down with in my office at Landmark Mortgage in Boise, Idaho
as his loan officer and mortgage broker.
Why do some new home buyers end up in an adjustable rate mortgage (ARM) loan?
Plainly advertised at very low start rates, these loans help the debt heavy borrower, or bulky
payment candidates whose eyes are bigger that their wallets.
To debt-ratio the folks with some debt and or larger than normal house payment estimate,
the mortgage broker has little room to play when money sources' guidelines dictate the ratio
acceptable to their loan programs. Therewith, this leaves another avenue of approach, the
intitial interest rate a loan begins it amortization journey with may be lowered intentionally to
attract mortgage brokers in the field to notice a "teaser-rate" opportunity to shrink the house
payment a while, ease them into owning. As well, the ratio figures line up now that the incredibly
low interest rate starts of the series of house payments.
The "teaser-rate" has an unfortunate ending at the contract specified date usually one-year
after closing, sometimes only 6-months and rolls to an adjustable rate mortgage on the home.
Now, the home loan is in an ARM. No biggy if the details are discovered early enough to do a
little homework on the ARM home loans. Usually excited nervous home buyers don't sweat any
of the financing details. The color choice of the wallpaper and curtains maybe, but not the
financing.
The little details of importance are: the marging, the index, the ceiling the hikes to the rate,
the timing of adjustment (every 6-months, every year?). What these are will soon be known to
you.
The margin is a fixed integer number with decimal and some percentage of a whole number.
I offer the example of: 5.55 or 2.50 or 6.75. This little goodie is obviously advertised to your
mortgage broker and he/she should know what a margin on an ARM is, but may skip over telling
you about what a margin on an ARM can or can't do for you the home buying prospect.
Margins are important because they attach to the index-rate. Together the form "the rate"
that your home loan is based on. One changes the other does not ever change on this loan once
it is closed and funded. Guess which does not ever change? The margin does not ever change.
The index floats and has been historically tracked and its history is openly documented. An index
currently down is bound to float up. The tallest spike in the index histogram is achievable again
and when,,,,well most of us wouldn't know. So a Libor index on a 6.00 margin at a cap of 16.50
with a teaser rate of 5.25 for the first year of the loan, looks attractive for the entry and
powerfully dismal thereafter. If the Libor index is floating at about 5.125 then the rate at time of
adjustment will roll to 11.125, then in 6-months or one-year (depending on the loan program),
Libor index is hovering around 3.75, what will the rate be this time when it rolls (adjusts) - 9.75 -
correct. What could the loan rate jump up to as it rises and rises and rises? 16.50 is where it
should cap. Does that make you a little nervous about this loan. Does me.
Indexes used come in a variety of national and international economies. The European
trends usually are more non-casual and fast changing. The London Interbank Offering Rate is
termed Libor. It ossillates from 4 to 6 percent most of the time. The COFI index is a nice slow
moving trend adjuster. The Cost of Funds Index is really small and conservative as its history
trends will show you. The COFI hovers between 2.5 and 4.5 and never leaps much at one time
when it does move. They float they are macoeconomically sensitive to the US economy and the
International economies. They will constitute the variable half of the ARM interest rate. Whereas
the "margin" constitutes the fixed half of the ARM interest rate on a home loan.
For REVIEW: A new mortgage loan presented as an ARM with a marging = 3.00 and floating
on the COFI Index, with a rate cap of 9.00, and a 'teaser rate" of 5.75% for the first 12-months of
the loan, with no points needed to buy down the initial startrate; sounds like a pretty fair deal.
Doesn't it?
Happy Home Buying,
yours truly,
Cheryl A MillerEld
Web Content Editor/Blogmaster
http://insiderealestatetips.blogspot.com/
http://websiteswest.blogspot.com
http://realestatewrittenrealistically.blogspot.com/
http://wswwebadvertising.blogspot.com/
twitter.com/websiteswest
http://twitter/websiteswest
http://insiderrealestatetips.blogspot.com/
http://boise-matchmaker-dating.blinkweb.com/
http://www.websiteswestII.blinkweb.com/
www.elance.com/s/wswwebadvertising
http://webadvertisingdesign.weebly.com/
www.elance.com/j/website-content-writing-editing/24269566/
www.elance.com/j/content-mortgage-website/24250332/
www.realestatemoneytips.com/scouting.html
www.elance.com/s/wswwebadvertising/
wswwebadvertising.blogspot.com/.../insertion-of-affiliate-html-links-into.html
wswwebadvertising.blogspot.com/
http://webadvertisingdesign.weebly.com/
twitter.com/amjustsayn/favorites
wswwebadvertising.blogspot.com/.../insertion-of-affiliate-html-links-into.htm
wswwebadvertising.blogspot.com/.../insertion-of-affiliate-html-links-into.html
www.elance.com/s/wswwebadvertising/about/
http://tilemarblestone.blogspot.com/ (CEld.cfo since 1992) (Gary Smith - contract project
)
?Negotiate Skillfully or Psychically? "Both!!!!" 'NYYCE. . . . .'
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