7.85% Rate 2 mths after discharge

We closed on our $200K mortgage in Aug. and got a rate of 7.85 just two months out! My broker was great! First, our rate was to be 8.25%, but he called the day before closing and gave us the news of the decrease. It saved around $60 per month.

If anyone wants a good broker in PA, let me know. I am not sure if he lisenced in other states.

Good for you CoachK, there is life after bk.

We closed on our $200K mortgage in Aug. and got a rate of 7.85 just two months out! My broker was great! First, our rate was to be 8.25%, but he called the day before closing and gave us the news of the decrease. It saved around $60 per month.

If anyone wants a good broker in PA, let me know. I am not sure if he lisenced in other states.

Congrats, what lender did you end up with for your mortgage?

How many points did you have to buy? What was your closing costs? Is it ARM? What are the stipulations of the ARM?

Is that a fixed rate mortgage or ARM? Is it 100% financing?

I think this could be another phising scam.....cough....tom....cough.....

Nice rate CoachK. What were your terms of your loan if you don't mind us asking?

wow, good for you. Do they service TX?

We closed on our $200K mortgage in Aug. and got a rate of 7.85 just two months out! My broker was great! First, our rate was to be 8.25%, but he called the day before closing and gave us the news of the decrease. It saved around $60 per month.

If anyone wants a good broker in PA, let me know. I am not sure if he lisenced in other states.

id be interested in learning who this broker is. congrats to you.

Sorry for never responding, but I moved and really forgot about the board. My lender was from Pittsburgh-- Pinnacle Lending. I did a search on the National Real Estate Broker website to find him.
He ended up doing my loan w/ Wells Fargo.
It is a 2/28 ARM.

It is a 2/28 ARM.

OUCH, OUCH, OUCH.

What is the index rate and what is the margin increase. I can't imagine it will be very good if your fixed rate is 7.85%

For those that don't know, a 2/28 ARM is an adjustable rate mortgage where the interest rate is fixed for the first 2 years, and then can change each year thereafter. This is a very common type of loan for people with so so credit. These loans are often referred to as "B Paper Loans".

Objectively speaking, its hard to know if this is a good deal or not unless we know the index rate and the margin rate. For example, the Index rate might be the yield on the 30 Year Treasurer note, or the Prime Interest rate (it can be anything)..the Margin rate is the amount over the index rate which is used to come up with the APR for the Mortgage. So, for example, it may say "3 points over Prime" (which means your mortgage interest rate would be the Prime Interest lending rate plus 3). The current rate of a 5/1 ARM is 5.62%

It might have been better if you waited a year or so from BK before embarking on a home purchase. Sure, you might be able to refinance out of this loan in a few years, but in the long run, that can be expensive.

Like Jim Cramer would say..."I am not going to bless this deal"

OUCH, OUCH, OUCH.

What is the index rate and what is the margin increase. I can't imagine it will be very good if your fixed rate is 7.85%

For those that don't know, a 2/28 ARM is an adjustable rate mortgage where the interest rate is fixed for the first 2 years, and then can change each year thereafter. This is a very common type of loan for people with so so credit. These loans are often referred to as "B Paper Loans".

Agreed. I don't know much about ARMs, but that doesn't sound too favorable to me. :blink:

I've seen TOO many people get in really big trouble with ARMs.....

Like me... Never again .. Learned lesson...

Who cares? 7.85% is not horrible, interest rates are not going to be going much higher in the near/short term, and you can refinance after a year or two. The risk/reward equation is in your favor for the time being.

Who cares? 7.85% is not horrible, interest rates are not going to be going much higher in the near/short term, and you can refinance after a year or two. The risk/reward equation is in your favor for the time being.

The problem is, the risk reward is not in their favor? You're correct, 7.85% is not horrible, it is NOT market, but it's not horrible either. The problem is, the closing costs of this deal, plus a refi 2 years down the road (note, almost all 2/28 ARMS come with prepayment penalties for the first 2 years of the loan) will cost you more money than simply waiting. Also, there is more risk than usual in that there still is no clear direction in the real estate market, so if their appraisal is not spot on for this first deal, it could screw them in two years when they try to refi.

We don't know what the LTV is here, but if it 100%, I can almost guarantee, this person will have a hard time refinancing in 2 years becuase odds are the current appraisal is inflated, (to allow the bank to finance closing costs and intital escrow), and in 2 years, you barely pay down any principal, and we simply are not seeing any short term appreciation in home values yet.

Example our 2 year arm in 2004 just adjusted from 7.5 to 10.5 and again it will go up to around 13.5 in May 07. We Wish we would have chose another route now we owe est 120,000 plus closing fees about 4000.00 .. Our home should appraise 138,000 est a apprasier updated me on this a couple weeks ago.. I was going by houses selling in my area 120,000 -130,000.. My problem is with the new closing costs our LTV is too high from what I am told to get a decent rate and not go into another 3 yr arm which by the way they can only do to get my rate to 8.25% total payment 1031.00 a month. which I chose not to do and we are currently selling and if it does not sell my May they we have to refinance into another arm by no choice .. We are in a no win situation... I would be careful with arms ... Hope this helps :)

I also have a 2/28 loan. I have a 1st and 2nd. 1st is for about $140k @7.5%, the 2nd is for ~$35k @10.5%. I was discharged BK almost exactly a year ago. I closed on my house in Aug of 2006, and there is a pre-payment penalty if I refi within 2 years. By Aug 2008, my BK will be discharged 2.5 years, I will have been in the same job for 2 years, and my credit should be significantly better. I have gotten some credit cards and used them lightly and very responsibly to build decent credit. I am still fighting a couple incorrect items on my credit report, which I would guess would put me near or at 700 across the board when they get resolved and my mortgage and credit cards have a little more history.

I also live in Boise, ID, one of the top strongest real estate markets in the country, so my appreciation should be decent. I'm just hoping it's 20% so I can refi into one loan.

Regardless, I am socking money away like CRAZY in case something doesn't go my way in Aug 2008.