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In article <Wtydncx0hcL-stzYnZ2dnUVZ_sCdnZ2d@comcast.com>,
"Brian Huether" <bhuetherNO@comcastSPAM.net> wrote:
> My wife and I bought a house in Aug 04. At the time Prime was 4.75% and we
> took a chance on an interest only loan through countrywide whose interest
> rate equals Prime. It is essentially a HELOC and so we pay no PMI. The value
> of the house at the time was around $355K and the loan amount was $339K. We
> knew we planned on being in the house for about 3 years so interest only
> seemed the way to go. At first our monthly payment was around $1200. Now it
> is $2350. We also pay about $2400/yr in taxes plus $700 for home insurance.
> I talked to someone about refinancing and here is what I was offered:
>
> A split mortgage where 80% of the loan is fixed at 7.125% (interest only)
> and where the remainder is fixed at around 8.125%. It is a zero cost loan
> and the monthly payment would be around $2350 (including taxes and
> insurance).
>
> So if I go with this deal then I'm essentially saving around $250/month. I
> was just wondering if anyone thinks I should be able to get a better deal.
> Keep in mind we plan on moving in about a year.
I do not see where the $250 a month savings comes from? It is $2350
either way, is not it? My best advice is to sell the house now and
try to capture some of the gain. The real estate market is dropping
like a rock, so it may take you a year, and you may have to cut the
price $30K to get it sold. Might as well start today. Renting is
a great deal right now, and landlords are pretty much taking it in
the rump at the moment. That is where you want to be if you are
moving in a year.
I would beware of any zero cost loan. Loans cost money, and they have
to get it from somewhere. Most of these zero cost loans write
the fees into your loan balance, so you end up owing more than
you get from the loan. You then end up upside down when you
close. Perhaps it is best to skip the refi and just pay the
interest only loan until you can get out.
-john-
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John A. Weeks III 952-432-2708 john@johnweeks.com
Newave Communications http://www.johnweeks.com
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Re: Refinancing advice needed
