Can I Lose My Long Beach Home Because Of a 7-Year ARM?

In today's Long Beach Mortgage Rates Report, I highlighted a 7-year ARM.  The post drew this comment:

You suggest a 7 year ARM? What happens if home values don't fully recover in 7 years? I dont want to be stuck owing more than what my home is worth when my rate resets.

Great question.  It shows how The Media is disseminating poor information about this mortgage crisis.  A 7-year ARM is a fully-amortized loan (which means it will be paid off in 30 years) with a fixed rate and fixed payment period for the first 84 months.  For a loan funded in March, 2008, that means the first payment will be in May, 2008 and will not change until April, 2015; let that sink in....2015.

At the end of 7 years, the loan turns into a one year ARM, amortized for 23 more years.  The new interest rate is determined by adding the index and the margin together.  Most ARMs are based on the LIBOR index, which today is about 3.5%.  Most ARMs have a margin of 2.75.  That means that if this loan were to adjust today, the new rate would be about 5.75%...not so bad, huh?  As you can see, rate rests aren't that awfully bad.  In fact rate resets are accounting for less than 2% of the foreclosures in California.

The following Question and Answers are not part of the original comment but frequent questions I hear daily.  My answers may appear to be flippant; they're not intended to be. 

WARNING:  HARD-CORE TALK ABOUT THE REAL ESTATE DECLINE AND MORTGAGE CRISIS

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Posted on 2008-03-03 @ 2.26:41 pm by Brian.Brady

Long Beach Condos For Sale Under $200k-February 2008

Looking for a Deal?

Long Beach Realtors keep hearing buyers saying that they want "A Deal".  Many investors have been sitting on the sidelines waiting for the Long Beach real estate market to drop low enough to swoop in and pick up a few great rental properties that will generate income. 

There are 29, 2 bedroom condos for sale in Long Beach, UNDER $200,000.  Many have been on the market for a long time, as is witnessed by the days on market (DOM) in the chart below; and are now price reduced into the very affordable range. 

For renters or first time home buyers this is an opportunity to own that has not existed in Long Beach for many years. 

For Long Beach investors, with a down payment of around 20%, many of these Long Beach Condos will produce the rental income you have been waiting for.

Most of these Long Beach Condos are either bank owned, forclosures or short sales. 

Do you want to make a deal?

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Posted on 2008-02-28 @ 6.15:40 am by Laurie.Manny

Mortgage Pre-Approval On Weekends

When you and Laurie Manny are looking at homes, on the weekend, banks and mortgage brokerages are closed.  Most of the lending professionals are at the beach; I'm no different.  I work hard during the week and enjoy the rest and recuperation the weekend affords.  You might find that it is increasingly difficult to get pre-approved for a loan, for your Long Beach home, after 5PM on Friday.

"I need a loan approval and I need it now!", you think.  "I have an offer to make"

 Here are four steps to securing a loan approval by NOON tomorow, regardless of what day it is:

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Posted on 2008-02-24 @ 1.49:11 pm by Brian.Brady

Downtown Long Beach Duplexes For Sale 90802 90813

Downtown Long Beach Duplexes For Sale

90802 & 90813

Are you looking for a Downtown Long Beach Home and finding them just out of your financial reach?  Have you considered a duplex?  Yes they often cost a bit more than a single family home, but the rental income can make the difference between being able to afford a home or not.  There are actually a few very nice duplexes available at this time, for very reasonable prices.  

The lender will consider the rental income and increase the amount you are qualified for making it possible for you to purchase. 

If you think this idea might work for you, it would be my pleasure to assist you and explain how this is a real possibility for you.

Listed below are all available Downtown Long Beach Duplexes.  Some of them are in the Willmore Historic District, a few of them are actually very nice and the prices aren't too shabby either:

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Posted on 2008-02-21 @ 12.29:47 pm by Laurie.Manny

Downtown Long Beach Homes For Sale 90802 90813

Downtown Long Beach Homes For Sale

90802 - 90813

Homes in Downtown Long Beach have become very affordable once again.  Buyers who waited too long in the hot sellers market and were priced out of it have a very real opportunity here to finally realize their dream of home ownership.  Some of these homes can be purchased for the same price as a condo. 

First time buyers can actually afford to purchase homes now.  It is still possible to obtain home loans, FHA loans are flowing once again and assistance programs exist. 

Some of these homes are short sales.  Short Sales provide buyers with a great opportunity to purchase Long Beach homes for a really good price.  Short Sale purchases can take several months to be accepted by the banks, the banks are inundated and are very backed up so the process is often a long one. 

Some of these homes are bank owned foreclosures.  Bank owned homes are often highly negotiable and can close escrow quickly once an offer is accepted. 

Buyers should know that short sale and bank owned or foreclosed homes are often not in the best of condition and usually require an infusion of after purchase cash for repairs and upgrades.

Read:  Long Beach Homes-Issues for 1st Time Home Buyers

Some homes are conventional purchases, some are in Long Beach historic districts and a few have a rental unit. 

Available homes in Downtown Long Beach:

5 + Bedroom Downtown Long Beach Homes

4 Bedroom Downtown Long Beach Homes

3 Bedroom Downtown Long Beach Homes

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Posted on 2008-02-21 @ 10.50:45 am by Laurie.Manny