Help dilemma mortgage?

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I recently bought a house selection of the arm, which is linked to Libor. Since I got a mortgage, LIBOR has increased. My current rate is now 8.25.Kui I refinanced, I want to pay a penalty of 3% (9000). Is it possible that I can change the type of loan is refinanced or paid trahv.Igasugune help would be greatly appreciated …


  1. Reply
    May 16, 2011 at 2:55 am

    It isn’t likely–that is one of the disadvantages of ARM–you have to think about the future.

  2. Reply
    May 16, 2011 at 3:42 am

    Interest rate has been going up regardless whether you are using libor or other interest benchmarks. At this point even if you refinance you won’t get that good a rate, plus the penalty you will have to pay. Most lenders will allow you to extend your mortgage amortization period and keep your monthly payment the same. Talk to your lender and see if it is an option. My other advise is to make extra payment whenever you can. Good luck.

  3. Reply
    May 16, 2011 at 4:01 am

    As a buyer who will be occupying the home, I would never recommend obtaining anything other than a fxied rate loan for just the reason.

    If you have closed over 6 months ago, I would say call the mortgage company who holds your loan. Sometimes your mortgage company will refinance your loan and waive the pre-penalty fee because they are keeping the loan — and will make more money!

    Good Luck!


    REALTOR® & Affordable Housing Specialist
    O. 866.894.3601 ~ C. 404.787.8685 ~ F. 404.745.8019

  4. Reply
    May 16, 2011 at 4:31 am

    Sorry to hear your dilemma. Sounds like the LO did not explain the risks associated with this program or perhaps the LO was selling he/she did not know. The Option Arm program is good for some people, that want cash control options. Considering that your in a pre-payment program, you will be unable to touch this loan for as long as it is that period. You might want to refinance your property anyways even with the PP there, especially if the 1 month LIBOR keeps moving north. Take the hit now to save yourself money over the long term. You can also file a complaint that the program was not explained to you correctly, and request a waiver of the PP. However I don’t think that will happen. Look at your options and see if paying the PP now will save you money in the long run. Contact me directly if you have any questions.

  5. Reply
    May 16, 2011 at 4:41 am

    IF you live in MN, WI or CO I may be able to help other wise the guy above hit it on the head.

  6. Reply
    May 16, 2011 at 5:13 am

    You probably cannot refinance without paying the prepayment penalty. You signed a rider agreeing to it. Depending on your equity position, you may be able to roll the prepayment penalty into a new loan. If you can get the rate down significantly, then your payments could be less even with a higher loan amount. That rate seems really high (conforming fixed rates for owner occupied properties are running in the 6.75% – 7% range right now and ARMs typically have a lower start rate… was this 100% financing? Or sub-prime? Without knowing any specifics, I can’t say if the rate you have is reasonable or if you can expect to find a lower rate out there.)

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