Comments on: How do I choose a mortgage product in today’s market? http://blownmortgage.com/2007/06/12/how-do-i-choose-a-mortgage-product-in-todays-market/ #1 Free Home Loan Modification & Debt Relief Help For US Home Owners - Truths, Facts & News About the Mortgage Industry Sat, 07 Nov 2009 02:53:18 -0700 http://wordpress.org/?v=2.8.3 hourly 1 By: Rhonda Por http://blownmortgage.com/2007/06/12/how-do-i-choose-a-mortgage-product-in-todays-market/comment-page-1/#comment-292 Rhonda Por Mon, 18 Jun 2007 16:47:05 +0000 http://blownmortgage.dreamhosters.com/?p=386#comment-292 Outstanding post, Morgan. I've been dealing with many shocked buyers when I'm providing estimates..."but I thought my payment would be x...why are are rates at z...I don't want one of those risky ARMs"... this is a must read! Outstanding post, Morgan. I’ve been dealing with many shocked buyers when I’m providing estimates…”but I thought my payment would be x…why are are rates at z…I don’t want one of those risky ARMs”… this is a must read!

]]> By: Brian Brady http://blownmortgage.com/2007/06/12/how-do-i-choose-a-mortgage-product-in-todays-market/comment-page-1/#comment-293 Brian Brady Sat, 16 Jun 2007 00:37:49 +0000 http://blownmortgage.dreamhosters.com/?p=386#comment-293 After clicking, I recognized my faux pas. Pardon my mistake, Mrs. Berkland After clicking, I recognized my faux pas. Pardon my mistake, Mrs. Berkland

]]> By: Brian Brady http://blownmortgage.com/2007/06/12/how-do-i-choose-a-mortgage-product-in-todays-market/comment-page-1/#comment-294 Brian Brady Sat, 16 Jun 2007 00:36:29 +0000 http://blownmortgage.dreamhosters.com/?p=386#comment-294 Morgan...you get it! You don't sell stocks at the bottom and you don't lock-into a fixed rate loan at the near top of an interest rate cycle. Mortgages (or money) is a financial instrument like stocks are. Mr. Berkland brings up great points about the AITD. I disagree with his rates prognostication so much that I believe his AITD offer would be useless. You can wrap an ARM as easily as a fixed rate loan. Just differing opinions about rates. Morgan…you get it!

You don’t sell stocks at the bottom and you don’t lock-into a fixed rate loan at the near top of an interest rate cycle.

Mortgages (or money) is a financial instrument like stocks are.

Mr. Berkland brings up great points about the AITD. I disagree with his rates prognostication so much that I believe his AITD offer would be useless. You can wrap an ARM as easily as a fixed rate loan.

Just differing opinions about rates.

]]> By: Schahrzad Berkland http://blownmortgage.com/2007/06/12/how-do-i-choose-a-mortgage-product-in-todays-market/comment-page-1/#comment-295 Schahrzad Berkland Wed, 13 Jun 2007 19:56:00 +0000 http://blownmortgage.dreamhosters.com/?p=386#comment-295 I would get a 15yr or 30yr fixed, regardless of how long I intend to live in the home. Here's why: 1. I don't want to assume interest rate risk in a global rising interest rate environment. Let the lender take the risk. By the way, the S&L crisis of the 1980's, where hundreds of S&Ls went under, was due to rising interest rates, where banks had to pay the now higher rate on deposits but was stuck with the lower rate mortgages. The Fed learned to protect the banks, by making suckers out of all Americans who got ARMs at the lowest point in the interest rate cycle. Well, I won't be their sucker. 2. Rates have nowhere to go but up, and some economists think we are at the beginning of a 20 year upcycle in interest rates. The bond market is cooled down today, but the momentum indicators are still up. 3. This is very important. If you want to sell your house in 5 years, and you have a fixed rate loan, you have a much better chance at getting a buyer. At a time when only 1% - 5% of all homes on the market will be selling, sellers who can offer carry backs or "land contracts" will have a 100% chance of selling. When interest rates are 10%, and you can offer your seller to carry a second on the home at 7%, you've got a deal. Although a wrap around clause is a breach of contract, it is not illegal, according to the report I read a while back on a legal website. I would consult an attorney about this, and a CPA. But basically you let your buyer make the payments to you, so you still pay the lender, and he never finds out. With an "all inclusive deed of trust", your sale is recorded, it conveys full title. A land contract is not alway s recorded, and it conveys only equity; the deed is recorded only when all payments are made. So future liens against the seller may attach to the property. To make this work, you need a good contract, and you set up a bank account that is only accessed by the buyer to make deposits, and for you to make payments to the lender. I would get a 15yr or 30yr fixed, regardless of how long I intend to live in the home. Here’s why:
1. I don’t want to assume interest rate risk in a global rising interest rate environment. Let the lender take the risk. By the way, the S&L crisis of the 1980’s, where hundreds of S&Ls went under, was due to rising interest rates, where banks had to pay the now higher rate on deposits but was stuck with the lower rate mortgages. The Fed learned to protect the banks, by making suckers out of all Americans who got ARMs at the lowest point in the interest rate cycle. Well, I won’t be their sucker.
2. Rates have nowhere to go but up, and some economists think we are at the beginning of a 20 year upcycle in interest rates. The bond market is cooled down today, but the momentum indicators are still up.
3. This is very important. If you want to sell your house in 5 years, and you have a fixed rate loan, you have a much better chance at getting a buyer. At a time when only 1% – 5% of all homes on the market will be selling, sellers who can offer carry backs or “land contracts” will have a 100% chance of selling. When interest rates are 10%, and you can offer your seller to carry a second on the home at 7%, you’ve got a deal.
Although a wrap around clause is a breach of contract, it is not illegal, according to the report I read a while back on a legal website. I would consult an attorney about this, and a CPA. But basically you let your buyer make the payments to you, so you still pay the lender, and he never finds out.

With an “all inclusive deed of trust”, your sale is recorded, it conveys full title. A land contract is not alway s recorded, and it conveys only equity; the deed is recorded only when all payments are made. So future liens against the seller may attach to the property.

To make this work, you need a good contract, and you set up a bank account that is only accessed by the buyer to make deposits, and for you to make payments to the lender.

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