We want to lower payments and remove pmi and the current mortgage is 184K. Current FMV is 250K.
I just want some fresh perspectives, since nothing is finalized yet, and if need be, we will just eat the appraisal…
I am hoping to have him get us into an interest only fixed for 3-5 years with no prepayment penalty…I already sent him an e-mail, he called right away and tried to talk us into going with an option arm, I want to know why lenders don’t just let me tell them the loan I want, why is this lender so passionate about this loan program? And how can I get it into his thick skull that it sounds like a bad deal for us???
Don’t go with any Mortgage tied to an arm right now. It is very unwise because all of the arm products are going to change a lot in the next three years. You are on the right track as far as an interest only loan. There is one out there that many lenders use that is interest only for the first ten years and then it is fully amortized for the remaining twenty years and you still pay it off in the thirty year am. If the lender keeps saying you should do this or that…then maybe he does not have a fixed product that will lower your rate and he may just be trying to find a way to get you to do business with him. Be cautious.
Patrick is right- he is probably pushing it because Option ARMs allow the broker to make a high commission. Sometimes, this loan program makes sense, but if he isn’t even suggesting other options, he probably has an alterior motive.
If you are for sure only going to keep the home for 5 or less years, a 5 year ARM, interest only, is not a bad idea in my opinion. You will be locked in for 5 years and can re-evaluate in 5 years if you decide to keep the home. In the meantime, you will save a lot of money in lower payments over 60 months.
I am now looking at a 5 year interest only fixed with a soft prepay. He says that having a prepay gets us a lower rate…hmmmm…He just quoted us 6.875 for 5 year fixed…
I am loan shopping tonight, I got the appraiser to hold off on the appraisal until I get a different lender…if it comes to that, which it may, since I have lost trust in this guy.
I am adamant about not having a prepayment penalty, but 1 year would be fine…
I hope I can work something out with this lender, if not, I will go elsewhere.
The problem I had with the loan is the home just closed escrow on Oct 12. First payment is due Dec. 1. It was preconstruction, at the loan signing right before escrow, the lady said we could refinance right away (PMI removal)
I had a problem on the refi, a lender told me we must wait 90 days…if anyone knows of a lender that can work around this, I may be interested; However, I now have my guard up, so I am going to be alot more careful this time around!
Thanks again for all the sage advice! :
Is 6.875 a good rate for 5 year interest only loan w/ soft prepay? My credit score is 776, and spouse’s is 705…no bk’s or anything bad, about 7k car loan and 3500 in ccard @ )% interest ( no lates no interest paid…)
I try to pay a little on interest as I can, use OPM and pay it back promtly…have the rates really gone up that much, or is this lender trying to ( I think) get us into the option arm… what a villan
I would hesitate on doing buisiness with someone who forces you into a sale. He/she should be able to show you at least three options and let you decide with respects to his/her financial opinion to keep in mind. Your rate of 6.875% on a 5 year interest only is a bit high. I’m seeing rates in the mid 6s down to 6.125% with some lenders. Is this an owner occupied refinance?
My grandfather would always say,
“If you wish to know the mind of a man, listen to his words”.
Thanks JKannie for posting this inquiry. You’ve also helped me determine the broker I used for my last transaction was trying to feed his entire family from my pocket. I’m searching for another broker here in Austin–one who will discuss my options instead of coralling me into a pasture I don’t want to graze from!
You’re Welcome, quickstudy. And a HUGE thanks to all who put their 2 cents into my posts!! I have a new lender and will not eat the appraisal fee. I got a good rate on a 5 year i/o fixed, and a HELOC…just in case I find that next deal and need some $$$! ;D