Hey all you financial peeps!
May. 7th, 2004 11:37 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
dancerjodiMortgage interest rates have gone up a lot recently (and its reported they will continue to rise). Here's the burst of the bubble that people have been talking about. It should end up driving housing costs down because interest payments will be more. I'm glad we're selling when we are, because if costs go down too much we'd be stuck in Framingham (not being able to afford to sell at market values). Whew!
For example, in March we were preapproved to get a loan putting 20% down with around a 5.2% interest rate. This would have given us a monthly payment in Waltham at about the same as we're doing in Framingham (since now we're paying PMI and higher taxes and in Waltham we'd have no PMI and lower taxes). Now the same loan is at 6.5% (a result of an increase of over $300 more a month in payment)!
Our broker is working to try and find us the best deal, and we were willing to do an ARM (if we could get at least 5 years fixed first). This is what we did in Framingham, knowing that we'd be moving or re-financing within 5 years. The broker suggested a "payment based program" that is fixed for 8 years at 5.25. After that its variable, and the variation is based on the "cost of savings index" which I guess is different from a traditional ARM mortgage. He said that even with a traditional ARM now, he wouldn't be able to get us a good rate as that 5.25 even with 5 years fixed!
Anyway, he's sending over some info to me this afternoon to compare rates between programs (we need to make a decision, like, next week). But, I was trying to find a reference to this "payment based program" online and can't find it anywhere. I know that rather than having a payment due at 1 point in the month it comes out of a checking account bi-weekly automatically. That's not really an issue . . . I'm just trying to read up on the 'fine print' stuff so we don't screw ourselves.
Damn interest rates! They were so low just 2 months ago! Now they are higher than they were 2 years ago. I know they are lower than they were many years ago but its all relative . . . lower rates = more expensive houses.
Fun, fun!
For example, in March we were preapproved to get a loan putting 20% down with around a 5.2% interest rate. This would have given us a monthly payment in Waltham at about the same as we're doing in Framingham (since now we're paying PMI and higher taxes and in Waltham we'd have no PMI and lower taxes). Now the same loan is at 6.5% (a result of an increase of over $300 more a month in payment)!
Our broker is working to try and find us the best deal, and we were willing to do an ARM (if we could get at least 5 years fixed first). This is what we did in Framingham, knowing that we'd be moving or re-financing within 5 years. The broker suggested a "payment based program" that is fixed for 8 years at 5.25. After that its variable, and the variation is based on the "cost of savings index" which I guess is different from a traditional ARM mortgage. He said that even with a traditional ARM now, he wouldn't be able to get us a good rate as that 5.25 even with 5 years fixed!
Anyway, he's sending over some info to me this afternoon to compare rates between programs (we need to make a decision, like, next week). But, I was trying to find a reference to this "payment based program" online and can't find it anywhere. I know that rather than having a payment due at 1 point in the month it comes out of a checking account bi-weekly automatically. That's not really an issue . . . I'm just trying to read up on the 'fine print' stuff so we don't screw ourselves.
Damn interest rates! They were so low just 2 months ago! Now they are higher than they were 2 years ago. I know they are lower than they were many years ago but its all relative . . . lower rates = more expensive houses.
Fun, fun!
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no subject
Date: 2004-05-07 08:46 am (UTC)no subject
Date: 2004-05-07 08:58 am (UTC)no subject
Date: 2004-05-07 09:29 am (UTC)I know a lot of mortgage companies will offer a bi-weekly payment option after you've recieved the mortgage - usuaually involving a setup fee and the like.
Perhaps this is a more formalized thing of that, where you're signed up at closing? I don't know how a program like that would directly affect interest rates, though. I know additional payments go toward principle, and thereby will shorten the loan.
When I bought the billerica house, my interest rate was 6.875. At least you're not up there yet!
Mortgages
Date: 2004-05-07 09:34 am (UTC)Its not an offering - its a requirement of this type of loan I guess. That's fine with me, either way!
"Perhaps this is a more formalized thing of that, where you're signed up at closing? I don't know how a program like that would directly affect interest rates, though. I know additional payments go toward principle, and thereby will shorten the loan."
I've gathered so far that the type of loan is different because of what the variable interest would be based on (savings account bank interest versus whatever the indicator of a regular ARM is).
"When I bought the billerica house, my interest rate was 6.875. At least you're not up there yet!"
We had 6.25 two summers ago (5 year fixed, then ARM) - we were hoping we'd get lower this time, geez! :)
no subject
Date: 2004-05-07 09:33 am (UTC)I couldn't bring veggie though, I had nothing that would have survived the trip
Tonight
Date: 2004-05-07 09:35 am (UTC)Thanks, you rock! :)
"I couldn't bring veggie though, I had nothing that would have survived the trip"
That's OK, I'll just make the corn on the cob.
no subject
Date: 2004-05-07 09:39 am (UTC)no subject
Date: 2004-05-07 10:25 am (UTC)