Talk:Adjustable rate mortgage
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Where does the 28 come in on the 2/28 hybrid ARM example? --Dbollard99 02:43, Jan 15, 2006
If you have a 2/28 you have 2 years of fixed payment rates. Your loan doesnt become an adjustable rate mortgage until the end of 2 years. At which point you have 28 years left of adjustable interest rates on a 30 year loan term.
There are several egregious errors on this page first....
Understanding Caps
-SNIP- What's better? - The lower these numbers are, the better for you, especially, the first number.
Examples: 2/2/5 ; 5/2/5 ; 2/1/6 ; 3/1/6 ; 2/4 ; 1/1/5 .
This assumes rising interest rates. In a declining interest rate market a smaller periodic cap is preferable. Fortunately for consumers interest rates are not always increasing.
Secondly, HELOCS are not DESIGNED to be in the 2nd position. Most lenders ALLOW them to be placed in the 2nd or 3rd position however, ALL lenders would prefer to have any HELOC they have provided to a consumer to be in the first position thus minimizing their exposure to risk.
Thirdly, you dont Purchase a loan. You obtain financing. You acquire a debt, but you do not PURCHASE a loan. (unless you are a debt servicer).
Fourthly, the tone of this article in general screams lawsuit.
Fifthly at the end of the article... [QUOTE] Sadly, most people do not take the time to learn about their ARM product, and some people even take these loans out as their First Lien loan, putting their house in jeopardy of foreclosure if there is an inflationary market. [/QUOTE] This is just an idiotic statement. Not only are all consumers malinformed but anyone that owns their home outright that takes out a $25k HELOC is in danger of losing their home.... OH NOOOOOOOOO!!!
when this article says "these days" such as:
expressed as a maximum rate, usually 9.95% or 10.95% these days
shouldn't there be a year or range of year attached to the 'these days", like: those days (2006). This statement wouldn't be "true" at a different time ?
Roosurn 15:22, 7 August 2006 (UTC)
[edit] Merge with Mortgage?
Merge with mortgage article? (FRM) --Rj 05:34, Apr 4, 2004 (UTC) this is a test
I do not think a merge would be good. There are many types of Mortgages, and these are linked to in the Mortgage page. This is a special type of mortgage worthy of it's own page. IMO, of course. CodeCarpenter 20:28, 22 January 2007 (UTC)
- Against. This page is too US in outlook. ARMis a US only page. simonthebold 16:16, 25 July 2007 (UTC)
- Against strongly. Mortgage article is about the legal mechanism, and as noted, mortgage loan is far too broad.--Gregalton 16:36, 25 July 2007 (UTC)
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- Against--strongly. Mortgage instruments are becoming more, instead of less complicated. Do any other Yanks remember Vice President Al Gore's Paperwork Reduction Act? When I renewed my amateur radio license, I did see some resultant streamlining.
Last week the Chairman of Freddie Mac spoke at the National Urban League convention in St. Louis, MO. He said that he had attended mortgage closings on his own home (and, as we had at our first closing) he attempted to read and understand the 23 pages of documents he had to sign. He wound up just signing each page with little understanding of what he was committing to. His point was that due to complicated mortgage paperwork, minorities are prime targets for predatory lending.
My wife and I been homeowners since 1984. At the first closing we hired a lawyer to attend the closing. Even though this guy talked to us like idiots, (which we were, as far as closings go), he was still somebody we could eventually sue if he had overlooked some detail which resulted in our subsequent loss. At the next two refinance closings we hired lawyers, and both of them were worth it, by attending to some fine details, which we would have doubtlessly missed.
We had a variable rate mortgage in the past, which stipulated a 3/4% per year ceiling which could go up or down with some index. A little over two years ago we got another ARM (without a lawyer) which we naively assumed had similar terms. We learned about our "2-28 loan" the hard way. Our initial rate was 8.5%. With 45 days notice we were informed that our two years are up in September, and that our rate would rise to 11.5%, and that they could (which means they will) raise it 3% every six months, without regard to an index, for the next 28 years. Ergo, one year from now, our rate will go to 14.5, and the year after 20.5%. We have yet to go back and read the terms of our loan. We wonder if, during the last year of our mortgage, our rate will be 168%?
My father taught me to read everything before signing, but at the first closing when our lawyer somewhat condescendingly explained the first couple of pages, we just signed. If we had had every page explained to our understanding, we would likely still be at the closing.
Along with the 3% rise, the August bill also informed us of our balance, which is higher than twice our market value. As soon as we got the notice, we contacted a local HUD counselor. If you are in mortgage trouble and do not have a real estate lawyer, go on the HUD website. We found it very educational and it contained a list of local counselors Her first advice was Do not refinance. We get many offers for refinancing which are always pitched as "helping" us. Mortgage companies are in business to make money, not to help anyone but themselves.--W8IMP 07:14, 18 August 2007 (UTC)
[edit] Cash flow ARM
I propose Cash flow ARM is merged here. Its just a variation on a theme. simonthebold 16:18, 25 July 2007 (UTC)
Comments I came to this article looking for general information about ARMs, and felt that I was well served. I think that the article DOES give give at least some global perspective, and is fair in talking about the overall justifications for ARMs from the both borrower and lender perspectives (term mismatch was new to me). However, I particularly wanted to learn how popular these loans are in the US - do they represent 10% of the loans out there? 90%? This is important in thinking about their role in the economy. Some news stories suggest that assets underlaid by securitized ARM-type mortgages may be at severe risk "these days" - implying such loans are common. Are there data? Also I do not believe a wikipedia talk page is a good place for financial advice (see top)
