<<The fixed rate is equal to the "fannie Mae required net yield + zero
percent" (is this the same as "prime".)>
It looks to be higher than prime - it is just over 6% today. You can
track it minute by minute at
http://ww3.freddiemac.com/ds1/sell/s...ayRNY?OpenForm

John Cowart

Thanks for all the info. Paying more now, to be more prepared later is
an excellent idea that I should've thought of.. I was reading through
my mortgage papers today and I have some new good information.

After the 3 year fixed rate, the rate is equal to the "Fannie Mae
required net yield" + %2.75. It is then adjusted every year.

BUT, there is a "Conversion Option" where I can convert to a fixed rate
for $250. The fixed rate is equal to the "fannie Mae required net yield
+ zero percent" (is this the same as "prime".) I can only do the
conversion after the rate becomes variable (June 07).

So, does it make sense to wait until then and convert? or, pay the $$
to refinance and lock in a lower rate now... I am leaning towards to
conversion option but open to other suggestions.

Thanks!

what happens in June of 07? is a balloon payment due? Is the new
payment prime plus a percentage? Can you afford to pay more on
mortgage now (pay down principle)?

June of 07 is 18-20 months away. Rates may go up, they will probably
not go back down this low for some time. What I would do in this
situation is keep my low payment, pay down my principle for next 18
months, then try to refinance at about month 12-18. Take advantage of
low payments while programming my household budget to absorb an
increase in home ownership costs in 12-18 months.

With this technique you would have more equity in June of 07 than if
you refinanced with a higher payment right now to lock in 6%. So is
the goal the lowest overall payment, have more equity, or something
else?

In article <1130339890.239118.155390[at]o13g2000cwo.googlegroups.com> ,
"Espey" <phespey[at]yahoo.com> wrote:

- quote -

I would suggest doing a refi early, or at least get pre-qualified.
The problem is 2 fold...first, interest rates will continue to
go up, and second, something could happen such that you no longer
qualify, so get the deal done while things are good.

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
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Espey wrote:
- quote -

If you can afford the 6% fixed payments, I would refinance to a fixed.
6% is still very low from a historical perspective. If the rate jumps
to 8%+ in June 07, you might be forced to sell.

I purchased my house June 04' and foolishly set up a 3/1 year ARM rate
at 5% so I would have low monthly payments. I also thought I wouldn't
live in the house for more than 3 years.

Now that I've lived here for a while, I'm thinking I'll live in this
house for longer than expected. I have no reason to move, I like the
house, etc.

I'm locked in at 5% until June 07' but should I refinance now to lock
in a 30yr rate? I'm not looking foward to paying to refinance, and then
paying higher monthly payments. But, I'm also kind of worried about
what will happen to my payment after the ARM expires if I don't
refinance because of increasing rates...

Suggustions/thoughts?

Thanks!