interesting story

[Ban Hammer 14,286]

link

[Marc and Olga 0]

Are you thinking that the ad in the Screenshot is an option ARM? I am

That is a sad story but people should ALWAYS remember to read EVERYTHING they sign and not just take the brokers words for face value, the broker is just out for the commission as shown here:

Jennifer and Eric Hinz of Somerset, Wis., are feeling the squeeze. They refinanced out of a 5.25% fixed-rate, 30-year loan in June, 2005, and into an option ARM with a 1% teaser rate from Indymac Bank. The $1,483 payment for their original mortgage dropped to as low as $747 with the new option ARM. They say they had no idea when they signed up, however, that the low payment adds $600 in deferred interest to their balance every month. Worse, they thought the 1% would last three years, but they're already paying 7.68%. "What reasonable human being would ever knowingly give up a 5.25% fixed-rate for what we're getting now?" says Eric, 36, who works in commercial construction. Refinancing is out because they can't afford the $15,000 or so in fees. "I'm paying more, and the interest is just going up and up and up," says Jennifer, 34, a stay-at-home mom. "I feel like we got totally screwed." They say their mortgage broker has stopped returning their phone calls. Indymac declined to commen t on the loan's specifics.

He made his commission and knows he screwed this couple in the process...but hey he made HIS money!

Glad I don't own a house yet!

[Bootylicious!! 2]

We have an ARM mortgage and it's not bad at all. It only increases every two years and can only go up one point when it increases. It started out at 3.75% and is now 4.75%. It just went up so it won't go up again until 2 years from now and then it will only be 5.75%. It tops out at a certain amount which I can't remember right now but it's not a huge amount. I guess it all depends on the terms of the loan.

[Marc and Olga 0]

We have an ARM mortgage and it's not bad at all. It only increases every two years and can only go up one point when it increases. It started out at 3.75% and is now 4.75%. It just went up so it won't go up again until 2 years from now and then it will only be 5.75%. It tops out at a certain amount which I can't remember right now but it's not a huge amount. I guess it all depends on the terms of the loan.

I am not certain if there is a difference between an OPTION ARM and just an ARM, I would guess there is as the option ARM story talks about having payment options with the people who cannot afford the FULL payment making the minimum payments (which they can afford). The rest of the interest is added to the balance. The story talks about people thinking they were safe for a few years getting a big surprise within 1 year their interest rate jumps because the balance has increased so much!

[Ban Hammer 14,286]

Are you thinking that the ad in the Screenshot is an option ARM? I am

That is a sad story but people should ALWAYS remember to read EVERYTHING they sign and not just take the brokers words for face value, the broker is just out for the commission as shown here:

i found it most amusing that the story is about ARM mortgages and hey what is that but an advertisement for one (I'd bet on it)

avoid ARM mortgages unless you plan to sell the house soon. mine is a fixed rate (5.5% 30 year)

[Marc and Olga 0]

Are you thinking that the ad in the Screenshot is an option ARM? I am

That is a sad story but people should ALWAYS remember to read EVERYTHING they sign and not just take the brokers words for face value, the broker is just out for the commission as shown here:

i found it most amusing that the story is about ARM mortgages and hey what is that but an advertisement for one (I'd bet on it)

avoid ARM mortgages unless you plan to sell the house soon. mine is a fixed rate (5.5% 30 year)

And pay outrageous prepayment penalties?!

My ex ran into that when she sold a house early last year...she was stunned when she received the $3,000 prepay penalty!

In the story they are talking about MUCH higher penalties too! $10,000 - $15,000!

[Ban Hammer 14,286]

Are you thinking that the ad in the Screenshot is an option ARM? I am

That is a sad story but people should ALWAYS remember to read EVERYTHING they sign and not just take the brokers words for face value, the broker is just out for the commission as shown here:

i found it most amusing that the story is about ARM mortgages and hey what is that but an advertisement for one (I'd bet on it)

avoid ARM mortgages unless you plan to sell the house soon. mine is a fixed rate (5.5% 30 year)

And pay outrageous prepayment penalties?!

My ex ran into that when she sold a house early last year...she was stunned when she received the $3,000 prepay penalty!

In the story they are talking about MUCH higher penalties too! $10,000 - $15,000!

hmm that's interesting. usually it's a way to get a house for the short term (short term being before the arm goes up). sounds like their arm was one of these: On certain ARMs, called negative amortization loans, borrowers can end up owing more money than they did at closing. That's because the payments on these loans are set so low (to make the loans even more affordable) they only cover part of the interest due. Any additional amount due gets rolled into the principal balance.

differences between arm and fixed

[Marc and Olga 0]

Are you thinking that the ad in the Screenshot is an option ARM? I am

That is a sad story but people should ALWAYS remember to read EVERYTHING they sign and not just take the brokers words for face value, the broker is just out for the commission as shown here:

i found it most amusing that the story is about ARM mortgages and hey what is that but an advertisement for one (I'd bet on it)

avoid ARM mortgages unless you plan to sell the house soon. mine is a fixed rate (5.5% 30 year)

And pay outrageous prepayment penalties?!

My ex ran into that when she sold a house early last year...she was stunned when she received the $3,000 prepay penalty!

In the story they are talking about MUCH higher penalties too! $10,000 - $15,000!

hmm that's interesting. usually it's a way to get a house for the short term (short term being before the arm goes up). sounds like their arm was one of these: On certain ARMs, called negative amortization loans, borrowers can end up owing more money than they did at closing. That's because the payments on these loans are set so low (to make the loans even more affordable) they only cover part of the interest due. Any additional amount due gets rolled into the principal balance.

differences between arm and fixed

Hmm did you actually read that article? It mentions that buyers have the option to make payments less then the interest CAUSING the negative amortization. which the article mention some people when they were first created would pay the lower payment part of the year and the larger payments later in the year...

they thought the 1% would last three years, but they're already paying 7.68%.

Refinancing is out because they can't afford the $15,000 or so in fees.

both from the source quoted above. =P The fees would be the prepayment fees.

[Veiled Princess 1]

That is a sad story but people should ALWAYS remember to read EVERYTHING they sign and not just take the brokers words for face value, the broker is just out for the commission as shown here:

As someone who works in this business I can safely say... that will NEVER happen

[Ban Hammer 14,286]

Hmm did you actually read that article? It mentions that buyers have the option to make payments less then the interest CAUSING the negative amortization. which the article mention some people when they were first created would pay the lower payment part of the year and the larger payments later in the year...

they thought the 1% would last three years, but they're already paying 7.68%.

Refinancing is out because they can't afford the $15,000 or so in fees.

both from the source quoted above. =P The fees would be the prepayment fees.

yes i read it and they got screwed.

[Veiled Princess 1]

mine is a fixed rate (5.5% 30 year)

Dang

Are you thinking that the ad in the Screenshot is an option ARM? I am

That is a sad story but people should ALWAYS remember to read EVERYTHING they sign and not just take the brokers words for face value, the broker is just out for the commission as shown here:

i found it most amusing that the story is about ARM mortgages and hey what is that but an advertisement for one (I'd bet on it)

avoid ARM mortgages unless you plan to sell the house soon. mine is a fixed rate (5.5% 30 year)

And pay outrageous prepayment penalties?!

My ex ran into that when she sold a house early last year...she was stunned when she received the $3,000 prepay penalty!

In the story they are talking about MUCH higher penalties too! $10,000 - $15,000!

hmm that's interesting. usually it's a way to get a house for the short term (short term being before the arm goes up). sounds like their arm was one of these: On certain ARMs, called negative amortization loans, borrowers can end up owing more money than they did at closing. That's because the payments on these loans are set so low (to make the loans even more affordable) they only cover part of the interest due. Any additional amount due gets rolled into the principal balance.

differences between arm and fixed

No, it just depends on the lender... some lenders realize how folks are planning to play the system and so they screw you with those ppp's

yes i read it and they got screwed.

This happens to most people who finance homes it may not be as bad but it's still a licking nonetheless.