i don't see how any adjustable rate mortgage can have a negative amortization.........

if your interest rate is 3%, it is 3% and you would do an amortization table based on that.... how does that turn into negative amortization.?

That is fairly risky buying a house with hopes of it going up..... at some point the interest rates will shoot up and the housing market will come down...... right now damn near anyone can afford a 250k house due to 5% interest..... when the interest goes to 7% all of the sudden there won't be such a demand for $250k houses and up.... (In my opinion that is)

I take the less risky approach and just buy cheaper houses ($20-$25k) and pay them off quickly or in cash..... I know exactly what I can rent them for and there is a line of renters waiting......

I am sure if you purchase in the right area's (hindsight is usually pretty good for me) you could make some nice "appreciation"..... but that is speculative......

 

See exactly, I don't need to prove a point. You mention houses ranging from 20k-25k, I'll buy that cash, P&I on this piece of cake of a finance, that's less than a car payment.

Market value in Seattle starts at 300k-500k for a decent house. These are cake also for me. I explained how to secure this type of situation, Interest Only, 30 year fixed, rent pays for the mortgage, mission accomplished. You ride the waive of inflation as property values skyrocket, why because "progression".

Are you suggesting an ARM, we both know after 7 seven years an ARM would be the stupidiest thing a homeowner could have done to himself. I'll buy it from them, interest only.

 

[QUOTE]Originally posted by under-rated

 

under-rated.... you have opened my eyes to something sort of neat.... my area is not going up in value though, but I could see buying something at the beach that may not seem like a great rental place, but riding the value up makes it worth it in the long run! Thanks! I doubt I will buy anything at the beach, but that is pretty interesting.


basically we are saying the same thing...... the ARM is good for certain people...
.. like Luder94 indicated..... he is using an ARM to pay down his principal now and will most likely move in the next 3-4 years anyway......

I agree 100% if the buyer intends to stay put for 10-15-20-30 years, hell ya a fixed interest rate makes since....takes the gamble out of what the rates are going to do.....

 

[QUOTE]Originally posted by under-rated

 

[QUOTE]Originally posted by Scot
under-rated.... you have opened my eyes to something sort of neat.... my area is not going up in value though, but I could see buying something at the beach that may not seem like a great rental place, but riding the value up makes it worth it in the long run!

 

[QUOTE]Originally posted by JohnE

 

[I won't argue the wisdom of fixed vs. ARMs, and interest only vs. traditional principle + interest. My wife and I have tons of money in the market, and in our case we were looking for, and could afford, a fixed 15 year].

I've refi'd a couple times in the last year using no-cost no-fee refi's. They're the greatest.

We financed $255k (max for a conventional at the time) three+ years ago at 7.75%. Using no-cost no-fee refi's, we've changed rates down as well as switching from a 30 year to a 15 year. What started as an $1850/month payment for a 30 year is now at $2015/month for a 15 year, and we've spent $ZERO$ on the refinancing.

Yeah, we could have got a 0.25% cheaper rate each time had we paid the closing costs, but then we'd be out at least $10k over all of the refi's we did chasing rates down.

I've had luck with erate.com, Priceline, and ETrade (actually met the VP of their consumer mortgage program -- after the fact -- in the airport bar in Denver a couple weeks ago while chating about no-cost refi's).

Expect all of the lenders to charge you an up front (refunded at closing) fee to keep you on the hook, and/or the appraisal fee. I've typically closed in ~3 weeks.

Make sure that you get enough of a rebate to cover all of the closing costs -- there is no sense paying a dime, especially if rates are going down and you'll do it again later. The lenders tend to nickle and dime you on fees, requiring a fraction of a point to avoid impounds, a fraction of a point to lock the rate for a reasonable period, etc. ETrade was very upfront with the fees, building the cost of the mobile notary in to the fees, etc., while erate didn't mention I had to sign in their office else pay the fee for a notary until we were close to closing.

 

[QUOTE]Originally posted by anotherbrian
[ in our case we were looking for, and could afford, a fixed 15 year].We financed $255k (max for a conventional at the time) three+ years ago at 7.75%.

 

[QUOTE]Originally posted by under-rated