Free: Contests & Raffles.
I don't know if adjustable rates are good or bad. But the Feds are already saying they are going to raise rates several times in the near future.Would this mean that once you get the loan your rates will automatically go up everytime the rates are increased?If this is the case. Would it be a poor decision to get an adjustable rate mortgage right now. Or is there more to the picture?Just curious, as I know little to nothing about this stuff.
The potential reward is a one time benefit of $8k before taxes, probably closer to $5k after deducting the interest. The potential risk is you could be hit with a $25,000 a year increase in the interest payments for the life of the loan if you have to or want to stay - another $2k+ a month on top of the original payment. It's always seemed to me like the borrower is assuming a ton of risk for a real reward of well under a percent. Lots and lots of things can go wrong, it's awfully hard to predict 3-5 years into the future:You don't move, change your mind, circumstances changeYou can't move, jobs, family or circumstances changeYou or your spouse lose your job right at the wrong timeDivorce, illness, injuryRates go up enough to prevent a move or refinanceHome prices go down and you can't sell or are upside downYou want to keep the house as an investment rentalProbably 100 other things
Quote from: Stein on April 01, 2022, 09:31:00 AMThe potential reward is a one time benefit of $8k before taxes, probably closer to $5k after deducting the interest. The potential risk is you could be hit with a $25,000 a year increase in the interest payments for the life of the loan if you have to or want to stay - another $2k+ a month on top of the original payment. It's always seemed to me like the borrower is assuming a ton of risk for a real reward of well under a percent. Lots and lots of things can go wrong, it's awfully hard to predict 3-5 years into the future:You don't move, change your mind, circumstances changeYou can't move, jobs, family or circumstances changeYou or your spouse lose your job right at the wrong timeDivorce, illness, injuryRates go up enough to prevent a move or refinanceHome prices go down and you can't sell or are upside downYou want to keep the house as an investment rentalProbably 100 other things Unless the bank will guarantee an opportunity to refi into conventional no matter the circumstances, I'd avoid an ARM 100% of the time.My first house was $200,000. I couldn't believe it. I walked in EASILY with 25k in equity. I got deployment orders a few months later and by time I got back my house was worth $130,000 (and it probably wouldn't have sold for that).Had I been on an ARM (like many were at the time), payment shock could have absolutely crushed me with no way out of the house. Because I was on a conventional mortgage, my payment stayed relatively static and I just had to sit and wait it out.In the example of someone buying a house for only three years, just remember: three years ago was before the lockdowns, before the Russia/Ukraine war, before Biden, before we had to "take a class to buy an AR-15", before our first trans HHS sec, etc. a LOT happens in 3 years at a macro level. Y'all can call it "interest savings" - I'll just suck it up and call it an insurance policy.
I never said you did anything wrong with my mortgage. I walked in asking for two options, you gave them to me, I selected one and we closed the deal. I'm very happy with the outcome.You posted something on a public forum. Something that has a long, distinctly negative history. In the handout flyer you posted, there are several warnings about payment shock.Did you expect everyone to respond with positivity here?