Sports / Finance: Tiger Woods' New $38 Million Crib

[Dan Gould]

in the US we have variable rates on mortages

So how can a lender calculate at the start the full cost of the mortgage, as Dan said?

MG

Variable rate mortgages are possible but fairly uncommon in the US. Most people do have fixed rate mortgages.

"possible but fairly uncommon"????

Fixed rate mortgages remain more common than variable rates in the US but variable rates have grown enormously more popular for ten years or more, and the percentage of mortgages that are fixed rate will continue to fall as different financial instruments continue to be marketed.

[The Magnificent Goldberg]

in the US we have variable rates on mortages

So how can a lender calculate at the start the full cost of the mortgage, as Dan said?

MG

Variable rate mortgages are possible but fairly uncommon in the US. Most people do have fixed rate mortgages.

"possible but fairly uncommon"????

Fixed rate mortgages remain more common than variable rates in the US but variable rates have grown enormously more popular for ten years or more, and the percentage of mortgages that are fixed rate will continue to fall as different financial instruments continue to be marketed.

So how do they calculate the cost of a variable rate mortgage in advance?

MG

[Dan Gould]

in the US we have variable rates on mortages

So how can a lender calculate at the start the full cost of the mortgage, as Dan said?

MG

Variable rate mortgages in the US have caps on both the maximum increase in an adjustment period as well as a lifetime cap (typical are 2/5 or 1/4). Therefore, at closing, there are more disclosures given and a worse case scenario is used to determine the maximum full cost of the mortgage.

I find it very surprising if fixed rate mortgages are literally unavailable in the UK, as most people recognize them as the safest, most conservative way to finance home purchases. What happens in a situation where interest rates are rising and payments increase to the point where homeowners can no longer make their payments?

[Dan Gould]

i'm not sure about the final numbers, i was told never sign a variable mortage

i've been at 9.5 % for 12 / 13 years

ss1

You weren't given the best advice. Certainly, in the past 5-8 years, you've missed the opportunity to refinance and lock in a much lower fixed rate (assuming you're credit score is good). You could still shave 2-3 points off your interest rate by refinancing now (again assuming a high credit score).

ARMs are definitely good choices under certain conditions.

[The Magnificent Goldberg]

in the US we have variable rates on mortages

So how can a lender calculate at the start the full cost of the mortgage, as Dan said?

MG

Variable rate mortgages in the US have caps on both the maximum increase in an adjustment period as well as a lifetime cap (typical are 2/5 or 1/4). Therefore, at closing, there are more disclosures given and a worse case scenario is used to determine the maximum full cost of the mortgage.

I find it very surprising if fixed rate mortgages are literally unavailable in the UK, as most people recognize them as the safest, most conservative way to finance home purchases. What happens in a situation where interest rates are rising and payments increase to the point where homeowners can no longer make their payments?

Usually, the mortgage lender will work out a refinancing option that takes the final payment further away in time and costs the borrower even more. Since interest rates usually rise when house prices are rising faster, there's usually sufficient equity for that to be a reasonable proposition. But people's homes do get reposessed. If that happens when prices are falling, the homeowner is in the mire; no home and a big debt.

MG

[Dan Gould]

in the US we have variable rates on mortages

So how can a lender calculate at the start the full cost of the mortgage, as Dan said?

MG

Variable rate mortgages in the US have caps on both the maximum increase in an adjustment period as well as a lifetime cap (typical are 2/5 or 1/4). Therefore, at closing, there are more disclosures given and a worse case scenario is used to determine the maximum full cost of the mortgage.

I find it very surprising if fixed rate mortgages are literally unavailable in the UK, as most people recognize them as the safest, most conservative way to finance home purchases. What happens in a situation where interest rates are rising and payments increase to the point where homeowners can no longer make their payments?

Usually, the mortgage lender will work out a refinancing option that takes the final payment further away in time and costs the borrower even more. Since interest rates usually rise when house prices are rising faster, there's usually sufficient equity for that to be a reasonable proposition. But people's homes do get reposessed. If that happens when prices are falling, the homeowner is in the mire; no home and a big debt.

MG

Are there annual or lifetime caps to how much a rate gets adjusted?

Why aren't fixed-rate mortgages offered?

[The Magnificent Goldberg]

in the US we have variable rates on mortages

So how can a lender calculate at the start the full cost of the mortgage, as Dan said?

MG

Variable rate mortgages in the US have caps on both the maximum increase in an adjustment period as well as a lifetime cap (typical are 2/5 or 1/4). Therefore, at closing, there are more disclosures given and a worse case scenario is used to determine the maximum full cost of the mortgage.

I find it very surprising if fixed rate mortgages are literally unavailable in the UK, as most people recognize them as the safest, most conservative way to finance home purchases. What happens in a situation where interest rates are rising and payments increase to the point where homeowners can no longer make their payments?

Usually, the mortgage lender will work out a refinancing option that takes the final payment further away in time and costs the borrower even more. Since interest rates usually rise when house prices are rising faster, there's usually sufficient equity for that to be a reasonable proposition. But people's homes do get reposessed. If that happens when prices are falling, the homeowner is in the mire; no home and a big debt.

MG

Are there annual or lifetime caps to how much a rate gets adjusted?

Why aren't fixed-rate mortgages offered?

They used to be, but I suspect the lenders caught a cold a bit too often. 35 years ago, one of my then elderly collegues used to boast about what a good deal he had with his fixed rate mortgage; it wasn't marginally better - it was a hell of a lot better than a variable rate. He got it just before the beginning of a housing boom and interest rates went up well above his fixed rate. If that happened in enough cases, it would be a powerful disincentive to lenders to try again.

There are no caps. The whole thing is market set (except for the Bank of England base rates, to which all other interest rates are sensitive). Lenders compete, partly on interest rates, which keeps them all more or less in line with one another. The country is small enough for people to borrow from a very wide range of theoretically local Building Societies (equivalent to S&L I think).

MG

[marcello]

I'll add my 2 cents here:

As a homebuilder for 20 years, my expierence is that a variable rate mortgage, since their inception in the hi rate 70's, offer a better value.

If you see a graph of interest rates since then, you'll see that the average rate overall rate in the peroid, is lower with a adjustable mortgage.

The prime reason is that each year, the pricipal is re-amortized , so you are paying interest on just the balance; not the original amount of the loan. If you can add to that a very low inital rate, cap and negotiate the bank's margin lower, you save a lot of $.

[The Magnificent Goldberg]

I'll add my 2 cents here:

As a homebuilder for 20 years, my expierence is that a variable rate mortgage, since their inception in the hi rate 70's, offer a better value.

If you see a graph of interest rates since then, you'll see that the average rate overall rate in the peroid, is lower with a adjustable mortgage.

The prime reason is that each year, the pricipal is re-amortized , so you are paying interest on just the balance; not the original amount of the loan. If you can add to that a very low inital rate, cap and negotiate the bank's margin lower, you save a lot of $.

It's amazing! I never HEARD of anyone being able to negotiate a bank into a lower margin. Just shows how different things are.

MG

[Tjazz]

Getting back to Tiger, I wouldn't worry about him, a TV show mentioned that he has about 80 million a year in endorsements.

[marcello]

I'll add my 2 cents here:

As a homebuilder for 20 years, my expierence is that a variable rate mortgage, since their inception in the hi rate 70's, offer a better value.

If you see a graph of interest rates since then, you'll see that the average rate overall rate in the peroid, is lower with a adjustable mortgage.

The prime reason is that each year, the pricipal is re-amortized , so you are paying interest on just the balance; not the original amount of the loan. If you can add to that a very low inital rate, cap and negotiate the bank's margin lower, you save a lot of $.

It's amazing! I never HEARD of anyone being able to negotiate a bank into a lower margin. Just shows how different things are.

MG

Sometimes, all you have to do is ask.

In my case, my home was one that the bank ( Chase) " portfolioed ". That is they kept the mortage instead of selling it because the loan to value ratio was so high. They reduced their margin ( profit in percentage ) by 18 basis points.

Edited April 16, 2006 by marcello

[The Magnificent Goldberg]

I'll add my 2 cents here:

As a homebuilder for 20 years, my expierence is that a variable rate mortgage, since their inception in the hi rate 70's, offer a better value.

If you see a graph of interest rates since then, you'll see that the average rate overall rate in the peroid, is lower with a adjustable mortgage.

The prime reason is that each year, the pricipal is re-amortized , so you are paying interest on just the balance; not the original amount of the loan. If you can add to that a very low inital rate, cap and negotiate the bank's margin lower, you save a lot of $.

It's amazing! I never HEARD of anyone being able to negotiate a bank into a lower margin. Just shows how different things are.

MG

Sometimes, all you have to do is ask.

In my case, my home was one that the bank ( Chase) " portfolioed ". That is they kept the mortage instead of selling it because the loan to value ratio was so high. They reduced their margin ( profit in percentage ) by 18 basis points.

As a builder, I guess you know things we ordinary mortals don't. Lovelyt home, by the way.

MG

[Soulstation1]

[marcello]

That really makes our concern for poor Tiger moot!

Now if you really want to feel concern for the guy, here's a picture of that homely wife of his. Remember when the sports guys were saying marriage might ruin his career?

Edited April 16, 2006 by marcello

[BruceW]

Yeah it is really tough on Tiger man,

SHE has a twin also.......

[The Magnificent Goldberg]

That really makes our concern for poor Tiger moot!

Now if you really want to feel concern for the guy, here's a picture of that homely wife of his. Remember when the sports guys were saying marriage might ruin his career?

I'd welcome her ruining MY career.

MG

[Soulstation1]

http://sports.espn.go.com/golf/news/story?id=2414980

tiger's taking time off for his ailing pops

[Soulstation1]

can tiger apply for food stamps since he ain't working........

[Soulstation1]

http://sports.espn.go.com/golf/news/story?id=2431912

Earl Woods has passed away

[Soulstation1]

Anyone think Tiger will be a factor in the US Open, with his lay-off?

[sheldonm]

Anyone think Tiger will be a factor in the US Open, with his lay-off?

...not sure he'll win it (not sure he won't) but the dude's a factor anytime he shows up!

m~

[Man with the Golden Arm]

this shit's gonna be crazy.

Tiger best leave the big-dog home and have at it all w/ the two iron.

[Son-of-a-Weizen]

ESPN shouldn't have Chris Berman doing golf. When he started in with his schtick on the 6th hole ("Jeff 'Seattle' Sluman"....ba-dum dum) I knew it was going to be a long 4 days!

[sheldonm]

ESPN shouldn't have Chris Berman doing golf. When he started in with his schtick on the 6th hole ("Jeff 'Seattle' Sluman"....ba-dum dum) I knew it was going to be a long 4 days!

[Soulstation1]

it ain't lookin' good for "The Man".....