Need Refinancing information

[watachii2]

Hi all. We were discharged from a chapter 7 in January 2006. We have been cleaning up our credit reports and recently applied for a cash out refinance. Our mortgage balance is about $115000 and our house is worth about $250000. The initial paperwork I received from a loan company was for a 2 year Hybrid Libor, which I am not sure I know enough about. It starts off at 8% for 2 years and then increases to 11 percent for just about every year thereafter. The payments will go from about $1200 to $1600 in 2.5 years. Does anyone know anything about these types of loans? I am really not comfortable with anything other than a 15 or 30 year fixed loan. Our credit scores are low-mid 600's. Why would the loan company send this type of loan to us, when I specifically told them I was not interested in an ARM? Lastly, it says that there "may" be a penalty for early payoff. Please let me know your thoughts. Thanks!

[MTG_BANKER_OH]

Hi all. We were discharged from a chapter 7 in January 2006. We have been cleaning up our credit reports and recently applied for a cash out refinance. Our mortgage balance is about $115000 and our house is worth about $250000. The initial paperwork I received from a loan company was for a 2 year Hybrid Libor, which I am not sure I know enough about. It starts off at 8% for 2 years and then increases to 11 percent for just about every year thereafter. The payments will go from about $1200 to $1600 in 2.5 years. Does anyone know anything about these types of loans? I am really not comfortable with anything other than a 15 or 30 year fixed loan. Our credit scores are low-mid 600's. Why would the loan company send this type of loan to us, when I specifically told them I was not interested in an ARM? Lastly, it says that there "may" be a penalty for early payoff. Please let me know your thoughts. Thanks!

You shoudl be able to get a 30 year fixed rate for the same rate with the equity you have in the property.