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URL:  http://boards.fool.com/xwordphile-you-wrote-anyone-interested-in-18712228.aspx

Subject:  Re: For Wells Fargo Mortgage Holders Date:  3/9/2003  8:10 PM
Author:  joelcorley Number:  154710 of 308576

XWordPhile,

You wrote, Anyone interested in refincancing might also want to check out www.ingdirect.com

Their mortgage rates are as good as their savings rates. And their closing costs are the cheapest we've found. We've just started the process of refinancing with them, so I don't know how complicated it will all turn out to be (they said it would take 5-6 weeks), but it should save us over $300/mo when all is said and done.


I hope you understand what you're getting into there. ING Direct only offers ARMs -- Adjustable Rate Mortages. Specifically, they offer a product called a 5/1 ARM. Its rate is fixed for 5 years, then changes once a year based on some rate index. The term is actually 30 years.

Right now ING Direct is charging 4.50% for their 5/1 ARM. According to BankRate.com ( http://www.bankrate.com/brm/news/refinance/refi_blurbs/rates.asp?prodtype=mtg&thisponsor=refi&tab=rates ), the national average for this type of loan is currently 4.19%. That means ING Direct is not even among the cheapest 50% of lenders. Of course, this doesn't take loan origination costs into account.

Are you sure you wouldn't be better off with a fixed rate mortgage? With interest rates in the tank, it's unlikely that rates will fall much further. Now might be a good time to lock in a low rate. On the other hand, if you don't expect to stay where you are for more than 5 years and/or you expect to make significant extra principal payments, an ARM might be a good idea since they offer a fair discount over fixed rate mortgages.

Even so, the average 15 year fixed rate loan is only running 4.80%. That's only 0.30% higher than the ING Direct 5/1 ARM. Even 30 year fixed mortgages are at 5.41%.

Personally, I'm just not sure ARMs are a good deal right now. How can anyone really know where they'll be in 5 years? And if they think they're going to move in that amount of time, why are they buying a home in the first place? While there are always exceptions, I think a fixed rate mortgage is normally just the smart thing to do right now. And even if your situation is an exception, I'm not sure ING Direct offers that great a deal.

- Joel
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