I Did it Again

I took on more than I should and need a bit of help.  Many of you know that Julie and I meet at the 1st Lance Armstrong event called Ride for the Roses down in Austin TX.  So, when my buddy asked me to join him this year to ride it- I quickly said yes.  Then remembered that I now have 4 kids and planning a weekend away on my own could be a tough sell but Julie was all for it.  Hopefully you might open this link and send me $5 towards my fundraising goal.  Or, join us on the team and come down to ride with me and Lance.

House for Sale

In 2003 I was able to handle the mortgage financing for my sister and brother in law as they bought a larger home in Dallas so they could have more room for the boys.  This place is awesome and only a few blocks away from Richardson Bike Mart’s Coit store location.  But with their boys off to and out of collage, time for these empty nesters to downsize.  Wait till you see the back yard and the study- just a great house and well off the main streets but so close to every thing.  Now, when they sell I wonder if we can have them move in with us so they can help us with all of our kids.

Speaking of Homes

Over the next few Weeks I want to chat a bit about what you should or should not do to your home.  With Julie and I watching a fair amount of TV while feeding the twins- we find ourselves on the design channels mostly.  One theme we see on the shows that help you sell is that after the stager helps get the home ready for the market- the sellers want to stay.  The experts all agree that most homeowners during uncertain economic times will choose to stay in their home and remodel vs selling.  So what projects should you do and will they help or hurt your values if and when you do sell?  As the season is changing here in Frisco and the weather cooling off, Julie and I are ready for our 1st project of taking out the one side door we have and replacing that with French doors that both open and side windows to brighten the kitchen.  Those doors open to a side patio and the long term goal is to frame that in as a screened patio but for now, just the doors.  So what will a project like this add or take away from the Davis value?  Check back next week.

Frisco Sunrise Rotary:

Frisco Sunrise Rotary:  We meet at 7:30am each Tuesday morning at Randy’s Steakhouse and our speaker this week is Carolyn Ann O’Riley. Carolyn is a Certified Hypnotherapist!

The Tackle Cancer Foundation

The Tackle Cancer Foundation 4th Annual Celebrity Golf Tournament.  Come swing your clubs with current and former pro-athletes, all for a great cause!  Tuesday, September 8

Golf for Frisco Cares

Frisco Cares Golf Classic, October 8th

Golf for Habitat

Habitat for Humanity of South Collin County 4th Annual Golf Tournament. Wednesday, October 14. Shotgun starts at 8:30am Woodbridge Golf Club, Wylie, Texas. $100/person
$400/team, includes cart, lunch, raffle and prizes

Quote by Joe Namath

“Until I was thirteen, I thought my name was shut up.”  

Lance wants you to sign this:

In his quest to raise awareness about Cancer, Lance Armstrong would like for you to sign this commitment to help.  He shares these lists with World leaders, showing how many folks want this to end.  

Why an ARM?

The other day I read in Scott Burns’ column in the Dallas Morning News as a reader was asking about ARM’s.  I like to read what Mr. Burns has to say on all subjects but do listen more when he gives mortgage advice.  The reason: I have yet to read him give bad advice.
 
ARM style loans came out in the 1980’s here in the States when the interest rate market was through the roof.  You might be surprised if you ever move overseas and want to purchase a home. ARM’s are very popular in the United Kingdom and elsewhere.  An ARM has a fixed and an adjustable time line.  They are available for 1 year, 3 years, 5 years, 7 years and even 10 years.  Those numbers represent the length that the loan will be fixed.  After that time, the interest rate can either go up or down depending on the details of that ARM program.  Most ARM’s are amortized over a 30 year loan period.  Each ARM has what is called a margin and an index.  A margin is a number given by the lender that stays with the loan and helps calculate what the rate will be during the adjustable timeframe.  An index is what that the ARM follows.  It could be the LIBOR 1 month, 6 month or 1 year; the MTA; or one of the Treasury options.  Now for the complicated part: an ARM will have a floor and a ceiling with limits as to how much the rate can go up or down depending on the index to which the loan is tied.  Some say no more than 2 points up or down at the first adjustment and no more that 5 total, but all of those details vary and you want to know all of that information before you get to the closing table.
 
For example, you are in a 5 year ARM and the 5 year’s are up.  A few months before the anniversary date would be a good time to dig out the closing papers that the title company gave to you as they have all the details you need.  Minor details will be on your monthly mortgage statement but the real info lies in the papers.  You want to look and see what your margin, index and details are so you can decide if staying in that loan at time of adjustment is the correct move.  Say you are in a loan with a 2.25% margin (most are) and follow the LIBOR 1 year index.  Head to the internet to find out what that index is trading. At the time of this writing it was 1.381%.  Add that to the margin and your new rate will be 3.63%.  Now look at the details. If your beginning rate was 5% and your contract says that it may move no more than 1% up or down, you would have a 4% rate for that next 12 months.  Repeat those steps each year, making sure that the index is not trading in a way that would make your rate unbearable.
 
The person in the above example made a good move by picking the ARM program as their rate dropped, but what about if we were not in a falling rate environment?  What if, while in that loan, their FICO score dropped as did their home value, making a refinance impossible?  ARM’s are never the problem; it is the details and the knowledge that goes with them.  Just like anything else in life, buyer  beware and know what you are getting into. 
 
Have an ARM story you would like to share with me?  Send it over. I’d love to hear it.