Mortgage problems??

**disneysteve** · 07-21-2007, 04:55 PM

No trouble here. We have a 25-year fixed rate loan that we're about 5 years into. We also have a small home equity loan (not a line of credit) that is also fixed rate.

**mbhunter** · 07-21-2007, 08:15 PM

No problems. But then again I also bought before things got crazy (2001) and only bought a "starter" home. Some folks are paying more in rent than I am on my 15-year.

**MonkeyMama** · 07-22-2007, 05:14 AM

Not here - if I couldn't buy with a fixed rate I Wasn't going to buy a home.

We have a lot of family/friends with ARMs back home and we worry about them. I keep looking at wonder at the still strong home values in the Bay Area but figure disaster has got to be around the corner with resetting ARMs. I am holding my breath for them. Though a lot of the damage may not be for a few more years. Hardly anyone can afford a home there at all without an ARM - our generation anyway.

Yeah most the people around here pay more rent for an apartment than our mortgage for the house we bought 5 years ago. I'm not exactly sweating my mortgage - phew.

**Ima saver** · 07-22-2007, 09:39 AM

We have a very young friend (still lives at home and works with his father) who built a spec house last year. He is still sitting on it and paying $1100 a month interest only. That is terrible. When we build a house, we do not get a mortgage!

**pearlieq** · 07-22-2007, 12:37 PM

Luckily we're in a stable position. We've got a 30 year fixed at 5.5%. We caught that right before rates started rising again, so we're pretty well set.

**marmatt** · 07-22-2007, 05:15 PM

I feel very lucky. We're 3 years into a 15 yr fixed at 4.75. We nabbed it right before the rates started creeping up.

The best part is, we're sitting on almost 100k equity & will likely have it payed off before the kids off to college!!

**disneysteve** · 07-22-2007, 05:18 PM

So is there anyone here with an ARM or interest-only mortgage that is giving them trouble, or threatens to in the near future? Or are we all too financially responsible to have gotten roped into any of those scams?

**mbhunter** · 07-22-2007, 07:03 PM

I'm of course way too financially responsible to do that. (Just kidding.)

Actually, I'd have a hard time affording the house I'm in now at today's prices. I bought just at the right time.

**ceejay74** · 07-22-2007, 08:15 PM

OK, I'm sure the people that aren't sitting happily in their fixed-rate-protected homes are too embarrassed to post now! So here goes: I'm not in trouble but I do wonder what's ahead of me. I'm about 3.5 years into a 30-year mortgage that has an ARM--fixed at 5% for 5 years, then adjustable after that.

I've started looking around at what I should do, and so far it seems like I should stick. In a year and a half, I'll have paid off a lot of debt and be able to pay a larger monthly bill, which I certainly will have, even if I refinance to a fixed-rate mortgage. If I refi right now, it will be 6.5% or more, so I feel like I should take advantage of this rate for as long as I can. On the other hand, I know that rates may rise a lot in the next year and a half.

So, as soon as my household's income has stabilized a little (should be in the next couple months) I may go seek some professional advice. So far all I've done is online research about it.

As long as you don't bawl me out for having the ARM (what's done is done), I welcome any advice or info.

Thanks!
CJ

**disneysteve** · 07-23-2007, 04:24 AM

CJ - The problem is exactly what you've discovered. There is no way to predict future interest rates. 5% sounds great right now, but what happens after that? You say that today you could refi at 6.5% which doesn't sound so great, but what happens if when you go to refi in 1.5 years, the fixed rate is then 7% or more? The problem is nobody knows the answer. I wish I had some sage advice for you but I don't.

I think some people took on ARMs or interest-only loans knowing and understanding exactly what they were doing, but the more I read, the more I realize that a great many borrowers didn't have a clue what they were doing. They got talked into creative financing by a slick broker who convinced them they were able to afford the loan and that it wouldn't be a problem when the low rate period ended. The broker didn't care because he'd be long gone by then, having sold off the loan and made his money, leaving the poor homeowner stuck with an unaffordable payment.

**MonkeyMama** · 07-23-2007, 06:28 AM

Originally posted by mbhunter View Post

I'm of course way too financially responsible to do that. (Just kidding.)

Actually, I'd have a hard time affording the house I'm in now at today's prices. I bought just at the right time.

No kidding. I couldn't afford my house today either... OR about any house in this area now.

**Fern** · 07-23-2007, 01:06 PM

i would only consider a fixed rate/term, otherwise, i wouldn't buy.

**LivingAlmostLarge** · 07-24-2007, 12:28 PM

I'm 2 years into a 7/1 Arm at 4.25% capped at 9.25%. Not worried at all, i'm out of here in 7 years and worse case scenario is I stay say 3 more years and it'll max out at 9.25%. Is my payment worse? Not really because of principal paydown.

Truth is that we never planned on staying longer than 7 years. That was the maximum, more like 5. As things are looking I think we'll be out in 5 years. Will I lose money on the house? Debatable. Rents are high where I live and we have super cheap mortgage compared to rent. So it's a toss up.

**rebeccae55** · 07-24-2007, 04:56 PM

To Living Almost Large and CJ:

I think the problem with your mortgages (or should I say potential problem) is that neither of you have a crystal ball. What if when you are ready to refinance, something like a job loss or lay off has occurred? What if you CAN'T refinance?

Living Almost Large, what if you don't end up moving?

Even though it will be slightly more expensive, I think there's a lot of peace of mind in a fixed payment over the long term.

Just my 2 cents worth.

Mortgage problems??