Types of Financing--What did you do?

iVillage Member
Registered: 12-12-2004
Types of Financing--What did you do?
3
Fri, 08-26-2005 - 1:09am
Hi, everyone. Well----Here's our situation! We refinanced house in June '04 with an ARM starting at 5.25% (one of those interest only things). What a mess! Because the feds have increased interest rates to keep alleged inflation at bay, and prevent overheating the economy, our mortgage payments and interest rate have increased EACH MONTH for one year!! Something weird called index and margin. Well, our margin went from 1.39 to 2.865!Sooo--DH has FINALLY agreed to refinance. NO cash out. Just the basic 30-yrs fixed at 5.75%. Guess you can pay 20% extra per yr no pre-payment penalty. If my cals are correct, if we pay an extra 3 payments per yr (about $6500) we could pay off the house in 13-15 yrs, and do the 30yr fixed without getting into a 15-yr fixed.. Our interest rate is now a whopping 6.365% and continues to rise each month. If we paid the P&I, we would be paying $3000+ per month! What have you all done to refinance? How many times have you done it? Did you use Cash to pay off bills, only to zip up the cc again or have medical expenses gouge you? Advice or thoughts, welcome. THanks. Whiz.
iVillage Member
Registered: 05-19-2004
Fri, 08-26-2005 - 12:07pm

Hi!

Like Suze Orman says, avoid those interest only loans! But you are seeing that for yourself. I would go with the 30 year fixed and pay extra when I could. That rate is great! Mine is 7.25% My mortgage was only $50k, which I pay $350/month so it doesn't seem so bad. That won't last long though, as we'll be building a new home and it will be around $800/month ~hopefully with a lower rate than 7.25%.

Is your mortgage around $2100 now? How much more do you owe?(You said 3 extra payments would be $6500) If that interest keeps rising on you~ that's going to hurt!! I couldn't even pay $2100 and all my other bills. You must be doing great income wise!!

Are you just refinancing the mortgage or adding other bills too? The thing I don't like about refinancing is adding bills to it that could be paid off so much quicker than 30 years. Like $1200 furniture or something- I think "that would take me a month to pay off- why stretch it to 30 years at 6% interest!!?" A company tried to get us to do that and we decided we could pay the stuff off faster ourselves.

We've paid off our ccs and furniture loan in May and have no desire to touch them- we kept only one. We freed up all of that money and use it if something comes up. Otherwise it goes into savings for the new house. We don't have medical bills, dh's insurance has covered everything so far.

Good luck with the refi!!! Nicki

Avatar for cl_phocid
iVillage Member
Registered: 03-26-2003
Fri, 08-26-2005 - 10:13pm

When DH and I bought this home in 2003, we did an 80/20 loan for 100% financing at 6.5% on the first, and an adjustable on the 2nd that got upwards of 9+% before we refinanced.

All my best,
Danni

iVillage Member
Registered: 08-19-2003
Sat, 08-27-2005 - 7:52am

When we purchased our house, we got a home equity and used that to pay off credit cards. One year later,we refinaced the house and cashed out equity to pay the cars off & more debt.

Big Mistake, I wish we had nto done that. So if I were you I would just refinance the house, and not cash out money to pay debt.

Shannon

Shannon


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