housing market question: bay area - Page 2

gnahc79 · 02-20-06, 10:01

I'm not sure about the ARM as a traditional loan, it probably exists though.

Over a year ago we looked at some places with a realtor and he said that a good way to do the interest only ARM loan is not to pay just the interest only mortage each month. Instead, pay several hundred dollars over the mortgage to build equity once the interest only term is over...never really looked into that though.

Yes, it boggles my mind how people can afford these homes. My wife isn't working, so it's near impossible right now. To somewhat safely buy a home I think a family's income has to be at least $150K combined. Yeah, I'm not there yet

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LightngSVT · 02-20-06, 10:05

I thought I bought my current house on a P&I ARM 5 years ago? We have since refinanced so Im not sure anymore. Paying a few hundred monre a month is basically the same thing as a traditional loan because the first few years almost nothing goes towards principal anyway on a 30 year loan.

My wife and I have hit that mark, income wise, but theres no way we could afford a $700 - $800k house!

DETAILKING · 02-20-06, 11:51

ARM mortgages are not interest only (they do exsist, but I don't recommend them). The amortize the same as a 30 yr fixed.

Picus · 02-20-06, 02:27

Quote:

Originally Posted by LightngSVT

I cant wrap my brain around the idea that a house, anywhere in the world, that is only 720 sq ft could sell for almost $850k!!!!!!! Are they plated in 24k gold? How high are salaries out there in Cali?????

People like the Bay Area. Salaries are inflated relative to cost of living, but for the most part that's white collar only. Actually I think for most people the mortgage payment isn't the issue, it's finding the down payment even if you do 5%. As for what you get for the money. Here is the house we sold. I still miss it sometimes, it was our first.

http://www.rockpaperpixels.com/pics/oldhouse/

Back OT - our mortgage is a 5 year ARM amortized over 30 years. It has nothing to do with interest only, the reason you get a 5 year is you get lower interest rates than a 10, 15, or 30 because there is the risk of having to re-finance at a higher rate in 5-years. The deciding facotr for us was that we won't be here for 5 years, so why get a 30 year loan at a 2-4% higher rate when we'll be moving in less than 5 and will need a new loan anyway.

DETAILKING · 02-21-06, 09:30

Quote:

Originally Posted by Picus

Back OT - our mortgage is a 5 year ARM amortized over 30 years. It has nothing to do with interest only, the reason you get a 5 year is you get lower interest rates than a 10, 15, or 30 because there is the risk of having to re-finance at a higher rate in 5-years. The deciding facotr for us was that we won't be here for 5 years, so why get a 30 year loan at a 2-4% higher rate when we'll be moving in less than 5 and will need a new loan anyway.

Exactly!!!!!!