Need Option ARM to refinance NewYork property

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Need a loan worth $552000 for Newyork property. Would refinance and cash out if possible. My income is 60K annually. I want to use my husband's credit since mine is bad – 632. I would be using it as OO property. Can anyone offer option ARM loan with 90% LTV? Or do you think a regular ARM will do. What are the current rates available for ARMs?

Guest 0.10 Dollars($)

Currently the ARMs rates are above 6% nationally and these are on an upward trend; so before you think of refinancing with an ARM, check out other suitable options. Also, analyze your finances and liabilities and calculate the probable payments before you decide to switch to an ARM, that too, negatively amortizing loan such as option ARM.

Guest 0.10 Dollars($)

I would say you go with a regular arm instead of option arm as such loan can lead to negative amortization. How is your husband's credit? At 632 it is not bad for you though, and how much equity in the house right now?

miller_st · Joined: 17 Jan 2007 Posts: 917 168.82 Dollars($)

Why are you looking at option arms Mark? If you can afford then take out a regular arm instead of option arm. How much are your monthly debt payments?

Miller

ezmortgageloanz · Posted: Sat Jun 16, 2007 2:13 pm Post subject:

For those wondering why the OP is seeking an Option ARM, one only need to look at the numbers---affordability (the stretching of in this case) is the driving force behind this request (one would need a 5 figure monthly income to qualify for a purchase of this magnitude---the PI payment alone would be low to mid 3K range).

There are a handful of Option ARM programs that allow for cash out up to 90 LTV for homeowners if you have a mid FICO of 660, 5 tradelines/credit references, =< 45 DTI, etc., but I don't advice you consider this unless:

a. You intend to sell the property shortly.
b. You expect a increase in household income (to compensate for the higher payment that will result from recasting and negative amortization accumulation).

If you total household income is 60K, you might want to consider scrapping the idea of getting a refinance and putting the property on the market and downsizing.

Regards,

Scott Miller

colin · Posted: Mon Jun 18, 2007 3:56 pm Post subject:

edwait · Joined: 18 Jun 2007 Posts: 1 1.59 Dollars($)

Option ARMS were never designed for the average homeowner. They got their start at investment tools but greed got the best of the lenders/banks and the brokers and they were sold more and more to individual homeowners. Mark, (or Mark's wife), you'd be well advised to take Scott Miller's advice of only taking an option ARM if your income is expected to increase. Dramatically I'd say from that $60k/year. Also, (please don't take offence here but) on an income of that amount, a 1/2 million dollar loan is way too much to service.

The option arm craze has gotten way out of hand actually and I'm in the process of creating a website to detail horror stories from option arm victoms, as I call them. Good luck with whatever you decide. It's sometimes better to sell one's home before that home creates financial problems that'll take years to get out of.

[Link deleted as per forum rules. Thanks.]

jenkin7 · Joined: 04 Jun 2007 Posts: 887 132.55 Dollars($)

Hello Mark,

Yes, there are banks that offer 90% LTV with option ARM loan. There are certain institutions that provide certain facilities with 90% LTV and they require the assuming FICO score to be 680 +.

lisascherzer · Joined: 04 Jan 2008 Posts: 599 69.56 Dollars($)

It doesnt look like you will qualify for an option arm with cash out at 90%. most lenders wont go above 80% cash out even with a credit score of 680. You may want to look at an interest only mortgage.

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