Conference nyoss1::market_investing

    I want to refinance my house from 8% 30 year to an A.R.M. at 3.375 30
    year. The problem is I have only lived in the house for 10 months. The
    original loan was for 93,000. The balance is now at 89800. Should I do
    this refinance?  The cap is at 9 something or other.

    I would imagine that ARM's are attractive right about now and
    understand that in the long run I could end up paying more but I need
    to get this mortgage payment down at least for this next year cause I
    may get TSFO'd soon. Please, any help would be appreciated.

    Ben

If you find an adjustable at 3.375%, it looks like the payments ($400?) on
$89800 would be about $285/month less than what you're paying now. Assuming
rates hold relatively constant for a while, it shouldn't take too long before
you recoup your closing costs. Additionally, if you apply the savings/month to
the outstanding principal (you must already be doing something like this to have
reduced the balance from 93000 to 89800 in 10 months), you can pay that down a
bit ($1700 in 6 months) to soften somewhat a future increase in the rate.

RE: .1

>                                                               ... I need
>    to get this mortgage payment down at least for this next year cause I
>    may get TSFO'd soon. ...

      Ben -- 
      
      You   clearly  understand  the  trade-off  between  long-term  and
      short-term costs.  If this is what  you  want/need  for  immediate
      "survival", then go for it.
      
      If you want to do this, act quickly. Once you no longer have a job
      it will be hard or impossible to re-finance until you establish  a
      new employment history.  

          And GOOD LUCK, no matter what!

    Please forgive me if you are already aware of this...
    
    Assuming you currently hold a fixed rate mortgage and want to convert
    to an ARM as you have mentioned, the bank will almost certainly require
    you to have between 35% and 20% equity in your home. In other words, if
    you purchased the home with less than 20% down, you may be in for a
    surprise. The bank will require a new appraisal (they might be flexible
    on this if it's the same bank you took the loan from for your current
    loan). Apparaisers appear to be even more cautious these days than they
    were a year ago and are appraising homes on the low side (since banks
    are looking to protect their interests, and since banks use appraisers
    that help protect their interests).
    
    BC (who's stuck with a Townhouse worth less than he owes on it and who
        would love to re-finance to a fixed rate but can't unless he forks
        over a big check to cover the difference plus the 20%)

re: .4

>    BC (who's stuck with a Townhouse worth less than he owes on it and who
>        would love to re-finance to a fixed rate but can't unless he forks
>        over a big check to cover the difference plus the 20%)

Don't feel too lonely there. There are many people who got stuck in the same 
situation as you do. If you think you are going to live there for a long 
time, then, it may be wise to cough out that big check and do the refinance 
now. But, with the economy the way it is in the N.E., who can tell how long 
their jobs will last?

Mike

    Thanks folks. I was tapped today. I have 5 weeks to get this done.
    Actually my termination date is Dec 10. My actually last day here is
    Nov 12. Not sure if I will go with the ARM but it sure sounds tempting
    in the sense that I would be able to make the mortgage payments with
    unemployment money. Right now I couldn't do that. I could get a 6.5%
    convential but would only save about 91 bucks.
    
    As far as .4 concerns are, well I was told that for a coventional loan
    I need to have at least 10% equity in the house and that it would have
    to be apprased at more than it was last year or else I would have to
    pay the difference. If that turns out to be the case then I would pay
    the difference. I need to ask more questions about the ARM as far as
    equity is concerned. I know the cap is a maximum of 6 over the life
    time of the loan and no more than 2 over a period of a year.
    
    This is going to be a close call as far as looking employed goes.
    
    By the way I live in New Mexico so it may all be a little different 
    here as we are having a housing boom.
    
    Ben

    Yes, you certainly should not delay in refinancing, under the
    circumstances.
    
    
    But, having refinanced myself only two weeks ago, let me caution you
    that at the actual closing, you are given another form to sign which
    warrants that your financial condition has not changed materially from
    when you applied for the refinancing. (This is a standard FNMA form.)
    
    Unless you can get to closing before your termination date, you may be
    faced with an ethical dilemma.

     Oh Great! Thats all I need. Oh well, if I don't land a job within this
    facility in the next 5 weeks I'll just cancel the whole dam thing and
    loose the appriasel fee of $400.00.  Damn this company!
    
    Ironically Today the 11 of October is my hire date.  17 years ago.
    
    Thanks for the bit of information.

    Re. .7 & .8
    
    	I just refinanced my house and didn't have to sign any such
    document saying my financial position hasn't changed.  Even if you
    are required to sign such a document, I don't agree with the assumption
    that you're financial position has changed for the worse in the short
    term.  You are getting something close to 6 months of pay which will
    cover a year of mortgage payments relative to the new rate.
    
    	Additionally, if you are worried about being able to close within
    the 5 week time frame, I believe that the package stipulates that you
    receive 4 weeks of weekly paychecks and then the lump sum payout. 
    During that 4 weeks, you are still technically an employee as far as
    payroll is concerned.  When your bank calls to verify employment,
    Digital will tell them you are still employed.  It usually takes 6 to 8
    weeks to get to close so it may be close but it costs you nothing more
    than what you have already put out for the appraisal until closing so
    you have nothing to lose.
    
    	If you are concerned about the ethics of the situation, you are
    actually reducing the banks short term risk by lowering your payment
    because you will be better able to afford it.
    
    	Bottom Line: It costs you nothing to continue the process.  Verify
    with payroll as to when you are technically no longer an employee. 
    Understand that your short term financial position has actually
    improved as far as this transaction is concerned and that you are doing
    the bank a favor by reducing their short term risk.  Remember that you
    have given alot to both Digital and the Savings & Loan industry
    (Government bailout at the expense of the taxpayers) so you should give
    yourself a break and stretch to get what you need.
    
    Best of Luck!!
    
    _Greg

>    	Bottom Line: It costs you nothing to continue the process.

      This  is  not necessarily so.  At some point you _may_ have to pay
      additional money to lock in an interest rate.  At that point  some
      or  all  of the additional may be non-refundable if mortgage fails
      to go through.  This depends on the bank you're refinancing  with.
      If/when you have to do this you may want to consider your position
      carefully. Until then, I agree that there is no reason to stop the
      process.
      
      As  for  legalities  of the situation... I strongly recommend that
      you do not lie or withhold requested information.   The  potential
      problems  are  just not worth it.  But as long as you believe that
      you can make the payments I see no reason that  you  should  offer
      any information that hasn't been requested.

>>    	Bottom Line: It costs you nothing to continue the process.
>       This  is  not necessarily so.  At some point you _may_ have to pay
>       additional money to lock in an interest rate.  At that point  some
>       or  all  of the additional may be non-refundable if mortgage fails
>       to go through.  This depends on the bank you're refinancing  with.

	I just applied for refinancing today.  All the lendors I know,
	the money paid to lock in the rate is completely refunded regardless.
	What isn't refundable normally is the application fee (or equiv)
	which has already been spent (for appraisal, credit reports, ...).

    re -1

    Thats what I was told. To make my decision more complicated she showed
    me a 20 year mortgage that would keep my payments exactly the same as
    they are now. I kind of like that one for long term. The arm would be
    just a short term thing. Its only an advantage for one year. After that
    it would shoot up and wouldn't be of any advantage to me. Decisions,
    Decisions, Decisions. *Sigh*

   				 Anyway this is getting scary. Here I am,
    literally TSFO'd and applying for refinance. Still have 4 weeks to find
    a job here. If I do manage to secure a job here it would mean a cut in
    pay. Right now I am struggling with, "should I just take the package"
    or "should I accept a job if offered one." The problem is the package
    would be at my current pay and I have 17 years here. 4 weeks + 6 weeks 
    of vacation + 1 weeks for every year I've been here + 2 weeks for
    every year over 15. Thats 29 weeks.

    That would carry me for about 6 months. If I accept the job then that 
    means a job but a cut in pay and no package. My gut feeling tells me to
    take the job, but my conscience tells me to take the money(package) an
    run. 
    
    Ben
               

    I have another mortgage question... what's the 'best' date to pay
    your mortgage payment?

    The reason I ask is that I recently refinanced and my old mortgage
    holder allowed automatic payment via Electronic Funds Transfer, so
    I had them take my payment directly from my checking account every
    month on the 10th (they chose that date.)

    My new mortgage holder doesn't allow payment by EFT, so I mail them
    a check every month.  The payment coupon says payment is due by the
    1st, with a 3% penalty added if you pay after the 15th.  So is there
    any advantage to paying on the 1st, as opposed to the 5th, or even
    the 10th?  (I suppose if I pay additional principal each month then
    paying earlier will make a difference.)

    Any thoughts?

    thanks,
    -dave

    
    When someone says that you can pay later with no penalty, I say pay
    later.  Just make sure that you don't cut it too close because if
    something gets messed up (small chance this will occur), you could be
    considered late and get the 3% penalty (and maybe a bad mark on your
    credit report).
    
    Dennis
    

    It depends on your State...
    Mass has a law that NOTHING (no late payment accessed, no entry on
    your credit report) can be done by your lender until 15 days after
    it's due.  I pretty much take full advantage of that law; typically
    mailing the check on the 10th.  Is it late?  Yes.  Can the lender
    do anything about it?  Not if they want to write mortgages here.
    kb  

    
    according to one banker I spoke with, they continue to compute interest
    on the days that you hold the money.  Your payment schedule assumes
    that you pay on the due date.  Essentially what you have is a
    preapproved loan for the grace period, but the interest associated with
    that loan, however small, is simply added to your obligation.
    
    if your mortgage rate is lower than prevailing rates, then I suppose it
    would benefit you to delay as long as possible (though it won't benefit
    you very much).  for all intents an purposes, it doesn't really matter
    when you pay as long as you pay within the grace period.
    
    /jim
    

    Whether or not you pay before the 1st could affect future credit
    applications.  I think there might be a legitimate distinction between
    "pays bills reliably" and "pays bills promptly", i.e. by the due date
    that a potential lender/issuer of credit would be interested in, and
    able to inquire about.  I'm not sure, I'm remembering this from a 
    conversation years ago with a realtor.
    
    Stan

	Personally I believe there is nothing but a ONE (1) time short-term
	benifit to paying late.  Ie. let's assume it's due on the 1st,
	you always pay on the 15th.  You're effectively moving your due
	date out by 15 days, and when you do that, you earn interest on
	that money for 15 days that *1st* time you do it.

	For most people interest on 15-30 days of the value of their morgage
	payment isn't very much.  When companies like DEC do it on a much
	grander scale it can be significant on what shows on the books.

>    Whether or not you pay before the 1st could affect future credit
>    applications.

I agree with this one.  When we refinanced last year, although the credit
report was clean, they wanted a copy of cancelled mortgage checks for the 
past year to show the "real" date the check was received...

We [almost] always had the check in by the 1st of each month, so I don't
know what the lender had in mind.

Dan

    
    re: 
    
    > ... I believe there is nothing but a ONE (1) time short-term
    > benifit to paying late ...
    
    There is one other I've found.  In doing my planning for bill paying, I
    will pay things as late as possible and run my checking account as
    close to 0 as possible every month -- the benefit is flexibility.
    If it's better to pay on the first, you can, if you have to pay
    somewhere in between, you can.  I use this benefit, for example, when I
    have a credit card bill due and need to pay it first to avoid any
    interest charges and having to pay the mortgage first would make my
    balance go below zero, etc.
    
    I agree with you that the interest you save is very small.  But I
    always say that you should practice paying your bills as late as
    possible (i.e., practice now) so that you can maximize the amount of
    money you have in your account.  You should practice in preparation
    for the time when you will be making a lot more money or managing a
    lot more money where this practice will make a bigger difference.
    
    Dennis
    

Re: .20

	I still don't see the benifit.  All you've done is shift your
	effective due date by X days.  Remember this is a morgage where
	your payments are the same every month.  Assuming your income is
	also the same every month, all someone who has shifted their
	morgage payment from the 1st of the month to the 15th of the month
	has done is to be earning interest on your paycheck from one
	part of the month to another (except for that very 1st payment
	again).

	On variable monthly bills I do agree with you.  On months when
	I've charged alot on my credit card, I wait til the last minute
	to pay it.  On the telephone bill, I sometimes go months before
	I pay because they don't charge interest or penalties (unless
	of course you defer too long after getting a disconnect notice :-).

	As far as checking account balance goes, I don't worry about it,
	my credit union has free overdraft protection (the feds allow
	them to automatically move funds from savings to checking up to
	six times a month).

	I do wish however that everyone did automatic electronic debits
	however, I do hate writing checks!  At least my morgage holder,
	does it, and so does Fidelity Investments, and of course Digital
	does direct deposit.