Anyone have any experience with Home Loans By Nick?

dannywho1 · Joined: 12 Jun 2005 Posts: 1 Location: Cleveland, Ohio

Hi, first time here, looking to refi. I ran across a site called Home Loans By Nick ( -http://www.home-loans-by-nick.com/ ). Anyone have any personal experience with this loan, and can I get it or a very similar one thru a bank or broker? Sounds "too good to be true".

I am otherwise thinking on getting a 4 way 5 year Pay Option Arm thru Countrywide at 5.7%, as now I have a "regular" 5 year ARM at 5.5% however with a piggybacked HELOC (80/20) at 6.5%. I became a first time homebuyer about a year ago. Thanks,

Dan

David · Joined: 19 May 2004 Posts: 703

Hello and welcome,

While this Nick may indeed may have a good program, keep in mind that often terms are given to attract buyers that often turn out to not be as good as they seemed initially. If you do get a loan from this person, feel free to let us know about your experience. Meanwhile, you will probably get a few comments some other helpful professionals over the next couple of days, so please check back soon.

So as to minimize posts that could be construed as advertising I disabled the link.

capnmorgan5555 · Joined: 29 Jan 2005 Posts: 29

Dan,

You really didn't give us enough info to give you advice. What loan to value is your 1st mortgage and your 2nd mortgage? What is the index and margin on CW's pay option arm? How long will you be in the home? Are you in a market that may have had substantial appreciation in the last 4 to 5 years and could be more prone to a "real estate bubble"?

I would be very careful with the Pay option, most of the indicies that they are based on are lagging behind the market by up to 12 months. That means that over the next 12 months they are all but guaranteed to go up significantly.

If you are financially savvy and will be using the minimum payment option to either eliminate other consumer debt or get involved in a SAFE and CONSERVATIVE Equity Management Plan then the pay option arm MIGHT be a valid alternative.

Personally, I prefer the 1 month LIBOR with a very low margin (1.5%) I get most of the benefits of the Pay option arm (Personally I prefer to not use the negative amortization found in the minimum payment especially since real estate could be overvalued now), I use the interest only option with either a HELOC or Fixed rate 2nd if I am going above 80% Loan to value (depending upon the client's ability to handle a RATE that adjusts). The 1 month LIBOR is closely tied to the fed funds rate so it has gone up 2% in the past 12 months, but it appears that the Fed is nearing the end of the interest rate hike cycle and with this index you move up and down faster than with the MTA, COFI, CODI, or COSI that the Pay Option Arms are based on. You could be better off with a 5 year Interest Only ARM if you are going to implement a Strategic Equity Management Plan- otherwise any of these loans are very dangerous.

In my opinion where the Option ARMs get you is in the margin. I did a 14 year analysis with normal margins with the above listed indicies and the 1 mo LIBOR was 1.4% a year lower on average each year. Plus, an overwhelming majority of Option ARMs have prepayment penalties. Many lenders use the Option ARMS with high margins (the consumer really doesn't understand ARMs well enough to ask about Margins) and a 3 year Prepayment penalty so they can make more $$$$.

Sorry, that I really didn't answer your question, but without the information I mentioned earlier nobody and FULLY and PROFESSIONALLY answer your question.

I hope this helps.