Refinancing Ain't That Easy Anymore

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skeptic_IHB

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Want to Refinance? Think Again, Brokers Say

http://www.cnbc.com/id/20723118

Some sobering stats in this article. A pretty good counterargument to those that say the coming ARM resets won't be that bad because people simply will refinance into a 30-year fixed.

Note that the stats are for August.
 
Refinancing won't be an option for many, which banks in their right minds would take on that refinance? If you don't have 20% equity in current appraisals and full-doc income, you're screwed. If many took on a 2/28 loan with a 3year prepay penalty, they're looking at 1 year of some outrageously high mortgages until they can refi, assuming the penalty is > the additional mortgage payments.

I can see why Cramer says to "just walk away", don't even think about using your credit card balances to prolong the pain... the minute you miss a payment, your CC interest rates will soar to 30% across all your credit cards, not just the one you missed a payment on.
 
Correct me if I am wrong. From what I have read the increse in Interest rates on a lot of these ARMs are lower then todays rates.

So what good would a refi do if they are getting higher interest rates then their adjustable rates.

I have no numbers to back me up but I would say they are looking to refi with another 2/28 or an interest only.
 
It doesn't matter if 30 year fixed rates are @ 5.0% You still have to qualify! That means you need equity, and equity is evaporating faster than my spilled bottle of isopropyl alcohol in organic chemistry class.

Secondly you must have a mortage below 417k. If you have a jumbo loan you are screwed.
 
But but but the mortgage broker said "Don't worry about it, when your ARM/IO/NINJA loan resets..you just refi" ....it's sooooo easy

Too bad suckers.

Teaser, ARMs, etc...when 30 yr fixed-rate were at an all time low, you could have gone the sane way.

Sorry but you deserve to lose and suffer for being ignorant. (5.5% 30 yr fixed MUHAHAHAHAHA)
 
TRRenter....I should probably leave this to lendingmaestro but I will take a stab at it. Depending on the loan some of the ARMs can adjust monthly, quarterly, bi-annually, or yearly I believe. So refinance into a fix gets you the same rate for the rest of the loan life without having to worry about your loan jumping around.
 
Thanks mino

I understand why you would want a fixed but I think all the adjutable rates were lower then todays rates no matter what way you went. I could be wrong it will be interesting to see what maestro says.

I did however forget that all of so cal is jumbo so they can almost forget about a refi.

Kelly Clarkson song in background "Just Walk away" My kids love her.
 
Your ARM, whether it's a 3, 5, 7, or 10 year will adjust at the end of it's fixed period. Most ARMS have a 3 to 5% adjustment cap. This means your 5 year ARM you got @4.5% in '03 can adjust up to 7.5%. You don't simply stay @ 4.5%

Now you can only hope that you can qualify for a conforming 30 year fixed at this point. Even if You can, you'll be looking @ 6.375%, which is higher than 4.5%. If your loan is jumbo, forget about it.

Consumer spending is going to screech to a halt.
 
6.375% is non Jumbo right? Jumbo is over 7 now.

What about the 1.5% teaser pick a payment loans? Do they have the same adjustment cap?
 
trrenter - Do you really want to know how an option arm works?

lendingmaestro - If the readers do want to know how option arms work you or myself can start a thread for it. I have been meaning to do it but it's hard without too much lender speak.
 
I have a general idea a brief overveiw would be great.

I just thought that the todays rate was pretty darn close or higher then what the ARM would adjust up to. It looks like that is pretty much the case so what good would a refi do if you can't afford the payments?

I don't need the lender speak just a 50,000 foot view. LOL.
 
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