Aaron Wheeler

Rates will always be higher for TIC properties because they are perceived as a higher risk. It is really a "fractional" loan in most cases, and the major banks will not handle them. It is not uncommon to have a rate that high.

To answer your questions:

1. Rates are directly tied to mortgage-backed securities (MBS). Rates on these have been coming down in response to the current financial crisis, so mortgage rates will drop to a certain extent.

2. There is nothing to prevent you from refinancing in the future as long as you do not have a prepayment penalty. Unless someone is will to absorb the closing costs as a part of the refinance, you really have to do the math and see if there is a tangible benefit to you to refinance given the monthly payment savings. If the payback period is over 24 months, it is probably not worth it.

3. The caps are listed as three numbers. The first number, 5, means the maximum increase at the time of the first adjustment. The second number, 2, means the maximum yearly increase up/down after the first adjustment. The third number, 5, means that maximum the rate can go up/down over the life of the loan. There is typically a "floor" rate that the rate cannot go under.

4. The current conforming loan limit is $417,000. The limit for "conforming jumbo" loans, created by the Economic Stimulus Act this year, is currently $729,750. Most banks will not be funding these loans after 12/1 as the law expires at the end of the year. For 2009, the conforming loan limit will either be $417,000 or 115% of the median housing price in an area, but not greater than $625k. So, for the San Francisco Bay Area, this number should be $625k.

You may want to consider traditional condos as well, as they can be easily financed through the major banks.

Please let me know how I can be of assistance.

Best regards,

Aaron Wheeler
President
Oakville Properties
http://www.oakvilleproperties.net - Tue Oct 7 2008, 09:56