Adjustable Rate Mortgages - Somethings Just Not Right

Hmmm. Somethings rotten in the state of... Or Something died in the mortgage.

Adjustable Rate Mortgages - Somethings Just Not Right
By [http://ezinearticles.com/?expert=Ray_Dudley]Ray Dudley

How's This For a Quote? "SAN FRANCISCO, California (AP) -- Here's a safe bet for uncertain times: A lot of banks won't survive the next year of upheaval despite the U.S. government's $700 billion rescue plan to restore order to the financial industry." CNN 10/05/08 Man, you gotta LOVE government intrusion. I'd make a long story short, but, then it wouldn't really be a story as much as a punchline so here's the long version of how we "fixed" our broken ARM.

About two and a half years ago my wife and I decide we'd like to buy a house since we had been renters for most of our lives. We start looking around and doing the "housey" thing by getting pre-approved and then submitting ourselves to the task of house hunting. I'm going to save the house hunting/time consuming/black hole tale for another day and jump ahead to the financing part (after all this is where it gets good). Since we had gotten pre-approved we started to receive voluminous emails and snail mail from all types of benevolent institutions that wanted to help finance our mortgage. Eventually we settled in with the gracious Washington Mutual.

They handled everything for us so that all we had to do was show up at the closing, sign a few papers, eat bon-bons and dream nice dreams. The process actually went smoothly. Unfortunately, being the naive and stupid consumers we were, we didn't pay too much attention during the signing. All we knew was that we were in an ARM that would adjust in two years at which time, we were assured, everything would be re-visited and then changes could be made. Well, after about a year we figured we'd re-read the mortgage to get ready for the upcoming meeting and realized we had a 40 yr. (yup, it says 40) adjustable rate mortgage that would ratchet up in 12 months to an amount close to what the Congress is debating for the AIG bailout right now and an interest rate only given by guys specializing in broken legs and a penalty if we tried to dislodge ourselves from it "prematurely". You gotta love the mortgage industry.

After the panic and puking stopped, we thought "Gee, maybe we should do some MORE research and see if we can do anything about this?" Bless my wife's heart, she found a company called TopDot Mortgages which deals with scenarios such as ours and she began a relationship with them that eventually ended up with us landing a real fixed mortgage. The great thing about a company like TopDot was there customer service. They hand held us all the way. They made MANY phone calls to our home to see if they could help us in any way during the process. They even went so far as to have a copy of our paperwork sent by FedEx to Florida where I had gone on some business so that I could sign it after my wife had done so in New Hampshire. Top rate! They treated us kindly and with great respect. The payment (which is the same as we had with the ARM) now includes the principal, interest AND taxes.

Sure, there were some more costs involved. And a few headaches since we had to gather MORE paperwork. But, we didn't lose the house, get stuck with outrageous payments and we sleep better.

So, just how comfortable do you feel about YOUR mortgage? Take a look at some recent headlines and links I've provided and then try to sleep good tonight: U.S. bank failures almost certain to increase in next year (cnn.com/2008/US/10/05) Wondering Which Bank is Next (money.cnn.com/2008/09/29) Www.fdic.gov/bank/individual/failed/banklist.html Wells Fargo to acquire Wachovia for $15.1B Government Seizes WaMu and Sells Some Assets Bank of America Buys Merrill U.S.News & World Report 2028 What the Bailout Means for Mortgage Rates As Big Banks Converge, Depositors Find Deals at Smaller Institutions How Lehman Brothers Took Out Washington Mutual The downfall of the $307 billion-asset WaMu represents the largest banking failure in U.S. history, dwarfing the 1984 failure of the $40 billion-asset Continental Illinois, which had previously held the distinction. (Disclaimer: We don't work for TopDot and have no relationship with them except that they hold our mortgage and just happen to like them.) And that's my view from the lake today! Ray

When not eating applesauce and writing articles Ray Dudley lives on a lake in New Hamphire with 3 cats and his wife. http://frommyviewonthelake.blogspot.com/ or http://web.me.com/rjdudley55/RudysFruity/Our_Home.html

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