Fix my mortgage? or leave it as an ARM?

NEW -> Contingent Buyer Assistance Program
I'm confused about the conforming loan limits.



I think that it is $729 this year, but thought that I had read that it was dropping to $629 next year.



Is that incorrect?
 
[quote author="freedomCM" date=1223189870]I'm confused about the conforming loan limits.



I think that it is $729 this year, but thought that I had read that it was dropping to $629 next year.



Is that incorrect?</blockquote>


$729K till year end. $625K starting 2009.
 
so HB guy is going to need to put in a $400k downpayment for his target house (1.0-1.1M) if he buys next year and wants conforming financing, no?
 
[quote author="freedomCM" date=1223273250]so HB guy is going to need to put in a $400k downpayment for his target house (1.0-1.1M) if he buys next year and wants conforming financing, no?</blockquote>
Or house prices have to drop some more.
 
i don't understand anyone who has a house and mortgage and just pays interest... why in heaving aren't you just renting in that case... and your payment on an IO only loan will eventually ballon to start paying for that principle you havn't starting paying yet, plus interest might be higher too...



IMO any loan without principle should be just dissallowed...
 
OK, so I get the point. I should fix it. But isnt a $5000/mo payment on a home EXHORBANT? I get that I am paying $3000 now but since I dont pay taxes in escrow, I realld dont feel the pinch every month. I know that sounds odd, but its true. If I fix it my payment will jump to $3775 + 1166 taxes + 91 insurance = 5032.00



So here is my dilemma. If I keep it as a 10 year int only, and hope in 10 yrs values will be back up and rates will be reasonable, will I not be able to either refinance or buy another home for the same or less payment?



Since when did $5000 for a home become the norm?
 
[quote author="flmgrip" date=1223340357]i don't understand anyone who has a house and mortgage and just pays interest... why in heaving aren't you just renting in that case... and your payment on an IO only loan will eventually ballon to start paying for that principle you havn't starting paying yet, plus interest might be higher too...



IMO any loan without principle should be just dissallowed...</blockquote>


I totally agree. IO ARMs are merely renting from the bank with equity participation. It works out OK if prices are going up and interest rates are falling, but when they aren't...
 
Did you find out if this loan adjustment is part of the FHA program? Any other catches other than the forced escrow... like PMI?



$5000 a month for a home that is $900k is the norm... it's when you have been used to paying only $3000 a month that makes it seem abnormal.
 
[quote author="homeowner" date=1223349982]If I fix it my payment will jump to $3775 + 1166 taxes + 91 insurance = 5032.00



Since when did $5000 for a home become the norm?</blockquote>




First off, you will be paying an extra 20% to build equity, so its like enforced savings. you would have had to pay the taxes and insurance no matter, right?





Second, $5000/mo became the norm because many, many people like you started buying houses based on artificially low rates.



If you didn't want to pay $5000/month, then you should have purchased a house for *only* $500,000, or rented instead!



<strong>People like you drove up the housing prices to these ridiculous levels</strong>
 
[quote author="freedomCM" date=1223358332][quote author="homeowner" date=1223349982]If I fix it my payment will jump to $3775 + 1166 taxes + 91 insurance = 5032.00



Since when did $5000 for a home become the norm?</blockquote>




First off, you will be paying an extra 20% to build equity, so its like enforced savings. you would have had to pay the taxes and insurance no matter, right?





Second, $5000/mo became the norm because many, many people like you started buying houses based on artificially low rates.



If you didn't want to pay $5000/month, then you should have purchased a house for *only* $500,000, or rented instead!



<strong>People like you drove up the housing prices to these ridiculous levels</strong></blockquote>
Absolutely in agreement.
 
[quote author="irvine_home_owner" date=1223353937]Did you find out if this loan adjustment is part of the FHA program? Any other catches other than the forced escrow... like PMI?



$5000 a month for a home that is $900k is the norm... it's when you have been used to paying only $3000 a month that makes it seem abnormal.</blockquote>


Yes, forced escrow. Im not sure if it is part of the FHA program. And I dont have PMI on my mortgage.



And to those who say I should have bought a home for $500,000... I would have loved to! But there were no homes at that time for that price that were suited for us. After all, we sold our 1700 sq ft home for $700,000. The least expensive home I found was $850k at that time that suited my family. So, living here, I am forced to overpay (above my means I believe, but I can afford it) for a home that would cost $250-$300k in other parts of the country. I did not know that prices would be dropping THIS much. So, I dont believe buyers like me are driving prices up, I think we are preventing a more drastic loss.
 
[quote author="homeowner" date=1223349982]OK, so I get the point. I should fix it. But isnt a $5000/mo payment on a home EXHORBANT? I get that I am paying $3000 now but since I dont pay taxes in escrow, I realld dont feel the pinch every month. I know that sounds odd, but its true. If I fix it my payment will jump to $3775 + 1166 taxes + 91 insurance = 5032.00



So here is my dilemma. If I keep it as a 10 year int only, and hope in 10 yrs values will be back up and rates will be reasonable, will I not be able to either refinance or buy another home for the same or less payment?



Since when did $5000 for a home become the norm?</blockquote>


If you can't afford or don't want to afford to pay back the principal, you shouldn't own the home. Someone has got to pay that back at some point. The house you bought for $900K at peak should fall to $600Kish before this all ends, probably 2010-2011. Years of stagnation after that with measured appreciation for years to follow. It's very possible your house might only make it back up to $700K by the time your loan adjusts. You wouldn't be able to refi unless you had paid the principal town significantly between now and then in this case.



Unfortunately these sweetheart rates only apply to 30-year and 5-year terms. No one knows when rates will head up, but everyone knows they will head up...
 
[quote author="homeowner" date=1223360952][quote author="irvine_home_owner" date=1223353937]Did you find out if this loan adjustment is part of the FHA program? Any other catches other than the forced escrow... like PMI?



$5000 a month for a home that is $900k is the norm... it's when you have been used to paying only $3000 a month that makes it seem abnormal.</blockquote>


Yes, forced escrow. Im not sure if it is part of the FHA program. And I dont have PMI on my mortgage.



And to those who say I should have bought a home for $500,000... I would have loved to! But there were no homes at that time for that price that were suited for us. After all, we sold our 1700 sq ft home for $700,000. The least expensive home I found was $850k at that time that suited my family. So, living here, I am forced to overpay (above my means I believe, but I can afford it) for a home that would cost $250-$300k in other parts of the country. I did not know that prices would be dropping THIS much. So, I dont believe buyers like me are driving prices up, I think we are preventing a more drastic loss.</blockquote>


"The least expensive home I found was $850k at that time that suited my family. So, living here, I am forced to overpay (above my means I believe, but I can afford it)"



I would like to examine this series of statements. First, there is a bit of a sense of entitlement to believe that it takes an $850,000 home to suit your family. Second, nobody was forced to pay or overpay. You could have chosen not to overpay, or you could have chosen to rent. Third, you over spent your means, and it seems from your other statements that you can't really afford the house. Just so you understand why some of the commenters are a bit annoyed, based on the statements here, it looks as if you chose to pander to your family's sense of entitlement and bought a house you cannot afford, and in doing so, you and others like you drove up prices to where nobody can afford them (which is also why prices are dropping so much now.)
 
Back again. Let me explain. Most Likely I will be buying a house around 1M. Maybe as high as 1.1m but I would like to stay around 1M. I will put 300K down (I have about 400K cash and 200K in IRA. I have a Porsche Cayenne and a Mercedes I paid cash for both.I gross about 250K and net 150K although this year I will be probaly net around 160K to 170K. My wife works p/t and makes about 20K a year. I can do 30 year fixed if I buy before 12/31 and my payment will be around $4300 without taxes assoc and homeowners. After all those fun things it takes me to about 6K a month. After you figure the tax savings it becomes about 4k a nonth. I net about 20k a month and my expenses after I purchase the house will be about 14K a month (That is with my quarterly taxes) so that leaves me with about 6K a month without my wifes income. What will I do with half of that 6K I will be paying down my mortgage. I will pay my mortgage off in 10-12 years. It is amazing what you can do when you have no debt. I will never finance anything the rest of my life except for a home. I have been debt free for the last five years. My wife and I live well within our means and pay cash for everything. But we will be splurging on our house. Hope that clears things up. I realize that some people who are conservative wouldn't take on a mortgage of 6K with my income. I see no problem only because of myself being debt free.
 
[quote author="hbguybill" date=1223450026]Back again. Let me explain. Most Likely I will be buying a house around 1M. Maybe as high as 1.1m but I would like to stay around 1M. I will put 300K down (I have about 400K cash and 200K in IRA. I have a Porsche Cayenne and a Mercedes I paid cash for both.I gross about 250K and net 150K although this year I will be probaly net around 160K to 170K. My wife works p/t and makes about 20K a year. I can do 30 year fixed if I buy before 12/31 and my payment will be around $4300 without taxes assoc and homeowners. After all those fun things it takes me to about 6K a month. After you figure the tax savings it becomes about 4k a nonth. I net about 20k a month and my expenses after I purchase the house will be about 14K a month (That is with my quarterly taxes) so that leaves me with about 6K a month without my wifes income. What will I do with half of that 6K I will be paying down my mortgage. I will pay my mortgage off in 10-12 years. It is amazing what you can do when you have no debt. I will never finance anything the rest of my life except for a home. I have been debt free for the last five years. My wife and I live well within our means and pay cash for everything. But we will be splurging on our house. Hope that clears things up. I realize that some people who are conservative wouldn't take on a mortgage of 6K with my income. I see no problem only because of myself being debt free.</blockquote>


Now that I see your gross (I was reading your net as gross,) it is obvious that you are very conservative in your financing. I commend you for not buying a $2.5 million house and thinking you could afford it.
 
I forgot one more thing. My wife is staying home with our three year old right now but if my business slows she can reenter the work force and make about 50-60K a year. This would be our safety valve if my business slows although I'm not anticipating it.
 
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