Posted by Charles Clark on January 21, 2003 at 09:35:34:
Negative Amortization means that possibly at the end of the year, you can owe more than what you started owing. If it ends up being more than a 10% difference, the bank/lender can convert without notifing you, to a fixed 30 year.
I would suggest that you get a 3 year ARM. Rates are lower, you can get cash out. Just not as low rate or as much cash out when it is a residential.
If you are trying to get mostly cash out, you can go with a sub-prime or an “Alt-A” lender. little higher rates, but more flexible, and with some “Alt-A” lenders, the rates are very good for clients with your FICO scores.
Charles Clark neiloans@hotmail.com
ARM Refinancing Advice needed. - Posted by REBETIS
Posted by REBETIS on January 20, 2003 at 23:52:32:
I’m a young investor and I have 3 single family homes. 2 are rented, I occupy the other. The house I’d like to refi has a mortgage of $138K and can easily sell for $180K. I’ve never refinanced before, and I’m paying 7.38% on an FHA loan. I want to do a cash out refi to buy another property. I got approved twice, but didn’t like the terms, the % were much higher than now because it’s non-owner-occupied.
I know I won’t keep this prop. for more than 3 years, so I would like to refi and get some $15 - 20K out and lower the monthly payments so I can have some positive cash each month. Instead of having to come up with $$ each month because the rent isn’t enough to cover.
I have good credit (690-700 FICO). Now, given the current low 30yr fix rates would it make sense for me to look into a 3 Year ARM?
What would you recommend? what exactly is negative amortization?
“so I would like to refi and get some $15 - 20K out and lower the monthly payments”
How are you going to borrow 15-20K EXTRA and lower your payments? The combination of you having a reasonably low rate now and the extra cash doesn’t jive.
Re: ARM Refinancing Advice needed. - Posted by William Earl
Posted by William Earl on January 21, 2003 at 16:49:47:
The difference for investors between an Arm and a fixed rate really has to do with your short term and long term goals. If you are going to sell the property in 3 years or less and realize the equity in it then I would suggest a 3/1 Arm. If you are going to keep the property for the long haul I would suggest a fixed in our market. The only problem you’ll have is that many lenders don’t want to go 90% LTV on an investment property (refi). If you’re at 75% they tend to like that.