Can someone tell me if a umb broker can be of help to me. we have a 7.6 % mtg on our home with an arm for 2 years that will be up in july.with adj.every 6 months.after that. we need a new mtg.Our mtg. was with a subprimelender. Our debt to income ratio we were told was the cause.The mtg. is for 355,000.with interest only pmts. of 2252.000 at 7.6%.We have another mtg. of 94,000 on a house trailer in the fla. keys on the water. Its a fixed rate @8%.pmts. of 965.00 month.We have this rented out for the past 4 months for 1100.00 a mo. We have the 94,000 mtg. for 6 years and the 355,000 mtg. for 7 years.We have 40,000.dollars in credit card debt. we have 55,000 dollars in two airplane loans. We make 105,000 dollars yearly and then my husband makes an extra 50,000 dollars a yr.fixing airplanes and doing annuals on planes.We have 30 day late pays on both airplane loans(2 to 3 a yr.)for the past 4 years. we have 30 day late pay on one charge card(1or2 a yr.x 2 yrs.)Our cars are paid for and the rest of our debt is living expenses.We up until 1 month ago rented the airplanes out to a flight school but because of high ins.costs we are trying to sell the 2 planes.Our other problem is that we get lots of deductions on the airplanes and some on the rental house making us get good tax returns but not actually showing that we made all that much on the side business(50,000 yr.) Is there any hope of us getting a fixed rate mtg. or even a 5 yr. arm which would help us in 5 years to get our credit cleaned up.

Yes you can refinance into a 5/1 or 5/6 arm. 5/1 is a little better. What is your FICO score? If you dont know I keep trying to give out a free credit report. No one is taking me up on it. You want it. Little Credit Counseling, Little Advice, and BAM!! get you a kickbutt rate!

How long do you plan on staying in the property?
Do you think you will refinance in a couple of years?
Some more questions of thought.

Based on what you've posted, I found rates between 6.125% and 6.25% on a 5 year ARM assuming your credit score is not below 580. We ignore non-mortgage late payments.

thanks for answering my post. I got a free credit report the other day. My fico score was 628,everything on mine was perfect except husbands airplane loans which are in both our names.these showed the 30 day late pays. there is a $12,000.fee for paying the 2 yr. interest only loan off early. The 2 yrs. is up I think in June with the 6 month adjustments starting in july of this year.We plan on staying in the house for at least another 10-15 years.I sent for my husbands fico score havent gotten it yet. But its probably about the same as mine.Is it unreal for us to think about a fixed rate out there in mortgage heaven with a decent rate??? and without paying points. Also the 5/1 you talked about-how does that work is it gonna be inteest only again,I dont want that.

I would suggest an MTA @ 1.95% SIVA (stated income verified assets), need 6 months reseves. Need LOX's for lates. Monthly P&I would be $1,303. Appreciation would consume any and all deferred interest in your market. This will free up additional cash allowing you to clear up some of your debt while still gaining equity.

Its not interest only. Let me know if you want something in writing.

I honestly (based off her credit score and DTI) don't think she should take on a fully amortized payment at this time. She needs to get some of her debt paid down. Her back end DTI is already above conventional standards, from the way it sounds.

T0 AZLENDER, please explain what MTA stands for what does lox's for lates mean.What would the terms of this MTA loan be?How do I figure how much I would need for 6 months of reserves. Do you have offices in Fla.

Yes, I have offices in Florida. MTA (Monthly Treasury Average), it's one of a few indecies averaged over 12 months which makes it much more stable. There are also COFI (Cost of Funds Index), COSI (Cost of Savings Index) and LIBOR (London Interbank of Rates, not to be confused with the 1 or 3mo). LOX is a letter of explanation.

This is how it works, you have to look at this as two seperate loans rolled in to one. We'll start with the first:

1) Minimum monthly payment: Based off a rate of 1.95% @ $355,000 = a P&I of $1,303.29, this payment is fixed for the first year and has a cap on the amount it can change annually of 7.5% of the payment itself. Meaning if your payment is $100 per month, the most it can increase the following year is to $107.50 and so on and so forth.

Part 2:
Now in the background we have your rate indexing each month. Let's say we use the COFI index, which this month is at 3.347%, this changes minimally monthly because it is averaged over 12 months unlike your standard treasury indecies tied to the 3/1, 5/1, 7/1, etc.

Now we add your margin which is set for the life of the loan. Lets say your margin is set at 2.45%. Starting month two, we add the index + margin = FIR (fully indexed rate) in this case would be 5.797%.

2) The fully indexed rate of 5.797% applies to your folowing payment options:

Payment opt. 2: Interest Only
Payment opt. 3: Fully amortized 15 year fixed
Payment opt. 4: Fully amortized 30 year fixed

This is where rapid equity gains come in to play if you can afford the payments. Obviously you cannot get a 30 year fixed rate with a 720 FICO as low as your FIR on this loan.

Now we have deferred interest of 3.847% should you choose to make the minimum monthly payment only. Keep in mind you are able to choose which payment you would like to pay and when. You are not obligated to stick with one. Appreciation rates in Florida are #2 in the country right now, right behind Arizona. This will take care of all deferred interest and you will actually gain minimal equity by making the minimum monthly payment.

Alan Greenspan implemented and utilizes this loan on his residence. It's a very, very good loan when used properly.

Now lets look at the overall picture:

Payment opt1: Min. Payment (based off 1.95%) = $1,303.29
Payment opt2: Interest Only (based off FIR) = $1,714.95
Payment opt3: 30 Fixed (based off FIR) = $2082.30
Payment opt4: 15 Fixed (based off FIR) = $2,956.90

This is not a loan you will want to keep more than 5 years as it will recast. This would be geared to help you right now in the way of freeing up additional cashflow to pay down your debt and re-establish your credit.

Ask your self this: Would you cash out the equity in your home and use it all to buy stock in one company? Thats EXACTLY what you are doing when you take out a loan that eats away your equity while you pray that the value goes up to offset the negative amortization.

If you've opened a newspaper or browsed the internet in the past 4 months you'll see that the over heated markets on the coasts have cooled considerably. You could easily end up owing more than you home is worth. The first wave of foreclosures is already coming in out in CA and I'm getting calls from Florida as well. Guess where? North Miami and West Palm Beach. Your home is only worth as much as a BUYER will BUY it for no matter how much YOU think its worth.

The Feds have already said that they will raise interest rates again which further reduces the amount people can afford to borrow. High end markets take the biggest hit because there are already a small number of people can afford them. Greenspan warned against 'exotic' mortgage products identifying the 'MTA' or 'Option ARM' in particular. Here is the link to his quote. Washington Post article and another on the same subject MSN article

Thank you Aaron for your input on MTA's I was already confused,Cant we just get a nice,normal 30 yr. loan with a fixed rate. Yesterday I called my subprime lender Novastar Mtg. to see what they could do to keep my business. they said if the house would appraise for 600,000 dollars and they paid off all of our 40,000.charge card debt plus we purchased three orig.pts.(all this to get debt to income ratio below 60%) the new loan would be 442,000. payoff on orig. loan would be 358,000. It would be a 7.05% fixed rate 30 yr. loan .for about 3600. a month. Of the 84,000 diff. It was broken down like this as I can remember from a phone conversation-358,000 payoff,22,000 for 3 pts.and closing costs,$3660.00 f0r 6 mo.of escrow prepays,47,000 of credit card and loan debt. when I add these up and subtract from the new 442,000 loan there is an additional 11,334.dollars of which she couldnt explain talked about some kind of fla.tax and that she would fax me the good faith monday,so I could understand. She said there was no longer a penalty to refinance as of april closing. She would not use my husbands side income of 50,000 dollars being it was a dba acct. with the business name and my husbands name. she did not take into consideration that the FLA.Keys house was rented out with a lease of $1100.mo.to cover that mtg.pmt. of 964.00.Does this sound like the best we can do through anyone. I dont think the house is gonna appraise at 600,000 with the market changing here in Fla. maybe a year ago but I bet its gonna be 525-550,000dollars.So thats gonna affect things too. I dont want to pay for numerous appraisals either. she also said theres no reason for the 5/1 arm as its the same rate as she was getting me with the 30yr.fixed and I wouldnt have to refi. in 5 yrs. please tell me what any of you experts have to say.

Aaron,

You assume she only pays the minimum payment for the time she has the loan. Bottom line, 30 year fixed rate on an MTA, COFI or COSI still blows away what she has been quoted by Novastar. BTW, your link didn't work. I don't put much faith in speculation.

I was simply offering her a way out to free up additional cash flow, clean up her credit and get rid of some of her debt.

As I stated above: I honestly (based off her credit score and DTI) don't think she should take on a fully amortized payment at this time. She needs to get some of her debt paid down. Her back end DTI is already above conventional standards, from the way it sounds.

U.S. 10-year Treasury notes posted their biggest weekly gain since December as slower-than-expected inflation spurred traders to scale back bets for how high the Federal Reserve will raise interest rates this year.

Traders drove down yields from last week's peak of 4.8 percent, the highest since before the Fed began raising borrowing costs in June 2004, as they grew less certain the central bank will lift its benchmark rate to 5 percent from 4.5 percent now. Fed policy makers next meet to decide rates on March 27 and 28.

Yep, the sky is falling huh Aaron? :sarcasm:

http://www.ofheo.gov/media/pdf/4q05hpi.pdf

Here are your links. http://www.msnbc.msn.com/id/8574006/

and

http://www.washingtonpost.com/wp-dyn/content/article/2005/06/09/AR2005060900661.html

I've got a 30 year fixed and a 40 year fixed that beats the pants off the fully indexed rate of an MTA.

Novastar, Ameriquest, Ditech, etc. will all quote you a product based off your home appraising and some ridiculous value. Then when the appraisal comes back at the 'real' value, they call and say 'Oh sorry, you cant get that rate because the appraisal came in lower' Now that they found out your thinking of refinancing, you've been turned over to their client retention department where they call you nearly everyday to make sure you dont go somewhere else.

If I spoke to a mortgage company that couldnt explain an $11,000 discrepancy and wouldn't accept DBA income AND wouldnt figure in rental income, I would be really nervous about giving them my business.

Just take it slow, ask lots of questions and get everything in writing from whatever lender you choose.