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MTA Mortgage Loan-Need Help
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   Types of Loan Programs-> Types of Loan Programs ~ General QuestionsMessage format
Posted 6/25/2005 8:45 AM (#258)
Subject: MTA Mortgage Loan-Need Help
I currently have a 30 year MTA Index loan with the 4 option payment plan.
My margin is 2.05, I have noticed my rates each month have been going up, I have had it for about a year now. This month my interest rate is up to 4.50.
With the steady increase in interest rates (MTA), I was wondering if I should refinance to a 30 year fixed rate at 5.25 with 1 point. My loan amount is 93,000. I looked at the future forecast of the MTA and it seems it is projected to go into the 4's in the next year or so, so combine that with my 2.05 margin and I will be in the 6's.
Is this a no-brainer or am I missing something.
Thanks for your help

PS. I am not really interested in paying only the interest only payment in the MTA loan as this will put me into negative amoritization. I like to pay extra each mo toward principal.
Shane Milne
Posted 12/22/2005 11:14 PM (#640 - in reply to #258)
Subject: RE: MTA Mortgage Loan-Need Help
You've probably already taken care of this but for others who are reading the OP would need to have an idea of how much longer he anticipates staying in the home for. If it's a long time then a 30-year fixed would probably be the best option, if only a few years then refinancing might not be in their best interest because they probably wouldn't recoup the costs of refinances by the savings (comparing savings on a monthly adjustable ARM vs. fixed is difficult unless you are speculating what the interest rate on the adjustable will do) of the new mortgage (in their example of 4.5% vs 5.25% it's actually worse). I'd assume they are planning on staying in the home for awhile since they are interested in the fixed rate, the MTA is usually around 4-6% in "typical" times, which we still are well under... so if your plan is long term refinancing into a fixed rate might not be a bad option (5.25% with 1 point might be difficult to find still), but without knowing where rates are going you could only make an educated guess, there'd be no guarantees.

Shane Milne
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