     Shawn (Slong) | Thursday, January 11, 2001 - 12:55 am 
Please let me know if you can refinance a non-conforming loan to a FHA loan when the 2 year prepay penalty ends. I know this may be a stupid question, but I have been approved for a 2/28 ARM, and I really am confused how this works.
I am extremely concerned about the difficulty in refinancing this loan at the end of the two years.
I expect that my credit will be squeaky clean, but I am self employed, and that has created a few problems in receiving better rates in the past. I have been told that after the 2 years expires, my rate could go up 1.5% every six months with a cap of a 7% increase over the life of the loan. I was also told that the rate would not go down at the end of two years.. it could stay the same, but it would not be lowered from the initial rate. This sounds extremely risky, and the thought of the payment going up every six months scares the hell out of me. I would sincerely appreciate any advice the many experts in this forum can give. |
| Don Semler (Dsemler) | Thursday, January 11, 2001 - 03:32 am
It sound like the issue is not credit but proof of income. A direct answer to your question is yes you can refi to FHA from subprime. Provinding that you meet FHA requirements. FHA required that all income be documented.
To get an idea of how much your 2/28 loan will go up, find out what the index is. Usually it is the 6 mo Libor. Look up this index and add the margin to it and this will give you the "Fully Indexed rate" This is the rate your most likely to be at after 2 years.
Shawn please anser the following questions and I may be able to give you some guidance.
Current approved rate:
Current Margin:
Loan to Value:
Purhase or Refi:
Credit scores(all three)
Origination/Discount/Broker points:
Current Wholesale Lender approved with:
PrePay Penalty Years:
Why have you been told you have to take this type of loan(credit, Income, etc):
There are many people out there who pray on people. It's now called "Predatory Lending". Many time their are better programs but either the broker is lazy or doesn't want to look to find them and is taking the easy way. |
| Shawn (Slong) | Thursday, January 11, 2001 - 11:12 am
Don, thanks.. here's the info:
10.99%
margin 6.4000
90% LTV
purchase-new build home
527, 524, 494
these scores are down from all being close to 600 a month ago, with nothing changing on report.
broker discount: .5
New Century Mortgage
2 year penalty
lite doc 12 mos. bank statements |
