Given the credit crunch, it probably will be a little more dependent on your specific credit on what strategy you would take then it was a year or two ago. If you explain a little more about your situation and what you want to finance people can probably give you some more useful feedback on how to do what you are trying to do.
I purchased a new home in 2004, Yes a ARM mortgage. I knew it was risky, but I also felt that interest rates would not rise, or at least so fast or dramaticly. To make a long story short,I always heard and thought that ARM's or some how related to the nat'l interest index by our fed gov. Contracts or contracts, and I guess in mine after it matures it has nothing to do with the fed gov. interest index,because its only gone up, and the nat'l index has gone done. It started at 6% i am at 10% already.
My point is, I believe there are idividual situations that are governed by the fed interest average. I think it just a starting point, right?
If you bought your house in 2004 then you probably are sitting on equity. But a 10% will eat that up real easily. Assuming you can refi out of your ARM w/o penalty I would go refi to a fixed right away.
Now, for 10%, I'm not real familiar with ARM characteristics because I never used one. But,review you docs and contact your bank. Unless you had one of those loans that gave you a teaser for 2 years and then 10% automatically became the floor, I would imagine it is to high... if you did that sucks.
ARMs are not tied directly to the Fed rates, they are tied to index funds based on the cost of lending most often (COFI and CMT).
Does anybody have any experience with owner financing? I'm interested in maybe doing an owner financed deal but can't seem to find any info on how to structure. Ideas?? Thanks
Once you come to an agreement with the seller, write it all down on a piece of notebook paper and take that paper to your local Title Co. Talk to someone there. Schedule a signing date. The Title Co. will do your title search and insure you that there are no outstanding liens on the property. There may be other steps that have to be taken by the seller... I have only been on the buyer side of the table. Talk to the Title Co. regarding cost and steps. They are usually very happy to help with the process. Good luck out there!
My advice to everyone who is looking into purchasing property, please whatever you do DO NOT GET ARM'S!!!! Always go with fixed mortgages because the rates will never increase. Plan for a 30 year fixed rate. Financially it would't be wise to want to rush the time by paying a mortgage bi-weekly. You'll only cut down the years by half and if you miss a week, the banks threaten with forcloser much faster than paying monthly. Also an advantage to havining a fixed rate is you can sell your house for everything that it is worth. ARM'S its hard deciding an asking price because the rates fluctuate mostly at a higher price.
There are interesting mortgages that can be worked out that make it appealing for investors. I agree that I would stick with a traditional fixed until you know what you are doing because you can factor a known amount into your equation.
Looking ahead a year and beyond it is hard to see rates being lower than they are right now, but you never know.
Here are some questions I would use to find a mortgage broker?
How many different lenders do you work with?
How maney different loan programs do you have?
What investor friendly programs do you have?
How quickly can you close a loan?
Asking these questions up front will give you a good idea of which broker will be the best to work with. The more lenders they work with the more loan programs they should have and the more options they have to shop for the best deal. If closing drags on it can cost you money or interest rate points. Make sure they give you what they say they are going to.
__________________
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125
i had an adjustable for first 3 years and then adjusted so much every year for 22 years before selling. the trick is that you pay the full amount principal plus interest an 1/12th of the monthly payment extra. by the time it adjusts you will be ahead and your payments will be lower. the problem most people hade was paying the very least so when it adjusted they owned more then at the start. because mine was tied to the 11th district it did not adjust as fast also they could only adjust so much each year. i was able to ride out the very high interest rate of the 80'' and 90's. if all they offer you is and adjustable, which they usually do if you don't have lots of experience in the credit world, just be smart on your payments.
Financing, have money, have good credit and getting no where
I have applied for a mortgage loan with a credit union and my own bank and got denied for telling them that it would not be owner occupied. Found out from a mortgage banker that the only way I can go is FHA. Another called Quicken loans got me approved for a loan but had to be FHA also. They got me all excited about one telling me about first time buyer credit which is great if your not wanting to invest in property, you have to live in this house for 3 years to receive it and on top of it not telling me by both of them that if you go with an FHA loan YOU HAVE TO OCCUPY THE HOME 1 YEAR, they want to stay away from investors, knowing that I wanted to invest but getting my money was all they cared about. Anyway what you don't know can hurt you. I would have been really happy getting this loan finally only to find out TOO LATE that it is a crime signing paperwork that you will occupy a home and don't and You can't sell it within a year, I would have been so stuck. I don't own a home but I live in one with a family member that has a house all in his name, he cannot afford this house without me. I got a broker thinking that I could do better with someone that the realtor recommended. Well they both are not getting back with me on my questions and it is really irritating. I wrote back the mortgage broker today and told her if she cannot find me a loan other than FHA than this cannot happen. I have cash in the bank that could buy a $10k house but then all the taxes and all the fix up money would leave me without much of a cushion. How much can you really get with a 10k house anyway. I really want the houses that are around $20-30k. Plenty in my area that have a lot of new items but I obviously don't have all that cash. Sorry I am frustrated, I keep trying on the computer for hours at a time researching and trying to get loans and so forth but it is not going. Someone help!!!! I just wanted to say though for a lot of you please beware of some of the information you are givin and do the research on it so you don't get caught in a position you can't get out of. Happy hunting!!
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Given the credit crunch, it probably will be a little more dependent on your specific credit on what strategy you would take then it was a year or two ago. If you explain a little more about your situation and what you want to finance people can probably give you some more useful feedback on how to do what you are trying to do.
I purchased a new home in 2004, Yes a ARM mortgage. I knew it was risky, but I also felt that interest rates would not rise, or at least so fast or dramaticly. To make a long story short,I always heard and thought that ARM's or some how related to the nat'l interest index by our fed gov. Contracts or contracts, and I guess in mine after it matures it has nothing to do with the fed gov. interest index,because its only gone up, and the nat'l index has gone done. It started at 6% i am at 10% already.
My point is, I believe there are idividual situations that are governed by the fed interest average. I think it just a starting point, right?
If you bought your house in 2004 then you probably are sitting on equity. But a 10% will eat that up real easily. Assuming you can refi out of your ARM w/o penalty I would go refi to a fixed right away.
Now, for 10%, I'm not real familiar with ARM characteristics because I never used one. But,review you docs and contact your bank. Unless you had one of those loans that gave you a teaser for 2 years and then 10% automatically became the floor, I would imagine it is to high... if you did that sucks.
ARMs are not tied directly to the Fed rates, they are tied to index funds based on the cost of lending most often (COFI and CMT).
Does anybody have any experience with owner financing? I'm interested in maybe doing an owner financed deal but can't seem to find any info on how to structure. Ideas?? Thanks
Once you come to an agreement with the seller, write it all down on a piece of notebook paper and take that paper to your local Title Co. Talk to someone there. Schedule a signing date. The Title Co. will do your title search and insure you that there are no outstanding liens on the property. There may be other steps that have to be taken by the seller... I have only been on the buyer side of the table. Talk to the Title Co. regarding cost and steps. They are usually very happy to help with the process. Good luck out there!
My advice to everyone who is looking into purchasing property, please whatever you do DO NOT GET ARM'S!!!! Always go with fixed mortgages because the rates will never increase. Plan for a 30 year fixed rate. Financially it would't be wise to want to rush the time by paying a mortgage bi-weekly. You'll only cut down the years by half and if you miss a week, the banks threaten with forcloser much faster than paying monthly. Also an advantage to havining a fixed rate is you can sell your house for everything that it is worth. ARM'S its hard deciding an asking price because the rates fluctuate mostly at a higher price.
There are interesting mortgages that can be worked out that make it appealing for investors. I agree that I would stick with a traditional fixed until you know what you are doing because you can factor a known amount into your equation.
Looking ahead a year and beyond it is hard to see rates being lower than they are right now, but you never know.
your bank/broker when getting a conventional loan.
Any certian questions that should be asked? Besides whats the rate, and closing costs/fees.
Thanks,
D
Don't Wish the Past, Create the Future! - DH
Here are some questions I would use to find a mortgage broker?
How many different lenders do you work with?
How maney different loan programs do you have?
What investor friendly programs do you have?
How quickly can you close a loan?
Asking these questions up front will give you a good idea of which broker will be the best to work with. The more lenders they work with the more loan programs they should have and the more options they have to shop for the best deal. If closing drags on it can cost you money or interest rate points. Make sure they give you what they say they are going to.
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125
One more question to ask is whether they have access to their own money.
i had an adjustable for first 3 years and then adjusted so much every year for 22 years before selling. the trick is that you pay the full amount principal plus interest an 1/12th of the monthly payment extra. by the time it adjusts you will be ahead and your payments will be lower. the problem most people hade was paying the very least so when it adjusted they owned more then at the start. because mine was tied to the 11th district it did not adjust as fast also they could only adjust so much each year. i was able to ride out the very high interest rate of the 80'' and 90's. if all they offer you is and adjustable, which they usually do if you don't have lots of experience in the credit world, just be smart on your payments.
I have applied for a mortgage loan with a credit union and my own bank and got denied for telling them that it would not be owner occupied. Found out from a mortgage banker that the only way I can go is FHA. Another called Quicken loans got me approved for a loan but had to be FHA also. They got me all excited about one telling me about first time buyer credit which is great if your not wanting to invest in property, you have to live in this house for 3 years to receive it and on top of it not telling me by both of them that if you go with an FHA loan YOU HAVE TO OCCUPY THE HOME 1 YEAR, they want to stay away from investors, knowing that I wanted to invest but getting my money was all they cared about. Anyway what you don't know can hurt you. I would have been really happy getting this loan finally only to find out TOO LATE that it is a crime signing paperwork that you will occupy a home and don't and You can't sell it within a year, I would have been so stuck. I don't own a home but I live in one with a family member that has a house all in his name, he cannot afford this house without me. I got a broker thinking that I could do better with someone that the realtor recommended. Well they both are not getting back with me on my questions and it is really irritating. I wrote back the mortgage broker today and told her if she cannot find me a loan other than FHA than this cannot happen. I have cash in the bank that could buy a $10k house but then all the taxes and all the fix up money would leave me without much of a cushion. How much can you really get with a 10k house anyway. I really want the houses that are around $20-30k. Plenty in my area that have a lot of new items but I obviously don't have all that cash. Sorry I am frustrated, I keep trying on the computer for hours at a time researching and trying to get loans and so forth but it is not going. Someone help!!!! I just wanted to say though for a lot of you please beware of some of the information you are givin and do the research on it so you don't get caught in a position you can't get out of. Happy hunting!!