iam refinancing for 2% 5 yr arm plan to sell when the market goes up iam doing the right thing? i hope to avoid negative amortization.advice please
2006-10-27 12:29:02 · 5 answers · asked by Anonymous in Business & Finance ➔ Investing
Look at the amortization schedule for the proposed mortgage and know before hand if you're going to have negative amortization. What rate is the ARM based off of? LIBOR? Prime? Prime probably isn't going to move too much anymore (maybe down next year if the Fed lowers). I would be very cautious and make sure I know the worse case scenario here, because you are very likely to have negative amortization if all you do is make the minimum payment, and if the rate goes up, your payment could increase while you fall behind on the principal. I wouldn't count on the market rebounding too quickly either.
2006-10-27 13:33:19 · answer #1 · answered by Anonymous · 0⤊ 0⤋
As long as you have plenty of equity in your home refinancing with a Option ARM or ARM to free up your cash flow is not a bad idea.
Its not a long term fix, so what is your back up plan if the market stays "Soft"?
2006-10-27 12:41:53 · answer #2 · answered by Jen G 3 · 1⤊ 0⤋
Does the market know about your plans?
You need a more detailed reason than that before you refinance.
Please include some actual numbers - you are virtually anonymous.
Just on the information you have given, the answer is no.
2006-10-27 13:33:59 · answer #3 · answered by J. C. 6 · 0⤊ 0⤋
Forget it. The likelihood of the market going up is exceedingly small. Interest rates are going up and will continue to do so at least for the next few years.
2006-10-28 03:52:02 · answer #4 · answered by NC 7 · 0⤊ 0⤋
you will probably have negative amortization. cannot rely on market uptick, especially with the recent news of housing prices. i don't think you are doing the right thing in this current climate.
2006-10-27 12:32:16 · answer #5 · answered by highloyo 2 · 1⤊ 0⤋