Woodbury option ARM implosion

An option ARM is a bet on future appreciation. Since most borrowers only made the minimum payment, the only way the owner made money is if prices went up faster than the debt accumulated. It looks like a good bet in good times, but there is no backup plan when times are tough.

The owner of today’s featured property used an option ARM, probably because he couldn’t afford the payment on a conventional mortgage. After five years, the loan recasted to fully amortizing, the payment increased dramatically, so the borrower defaulted. The bank didn’t waste much time foreclosing on this borrower, so he didn’t get to squat very long. Times are changing.

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Proprietary Irvine Housing News home purchase analysis

73 MISSION Irvine, CA 92620

$475,000 …….. Asking Price
$738,000 ………. Purchase Price
5/19/2006 ………. Purchase Date

($263,000) ………. Gross Gain (Loss)
($59,040) ………… Commissions and Costs at 8%
============================================
($322,040) ………. Net Gain (Loss)
============================================
-35.6% ………. Gross Percent Change
-43.6% ………. Net Percent Change
-7.6% ………… Annual Appreciation

Cost of Home Ownership
——————————————————————————
$475,000 …….. Asking Price
$16,625 ………… 3.5% Down FHA Financing
3.92% …………. Mortgage Interest Rate
30 ……………… Number of Years
$458,375 …….. Mortgage
$142,251 ………. Income Requirement

$2,167 ………… Monthly Mortgage Payment
$412 ………… Property Tax at 1.04%
$300 ………… Mello Roos & Special Taxes
$119 ………… Homeowners Insurance at 0.3%
$527 ………… Private Mortgage Insurance
$150 ………… Homeowners Association Fees
============================================
$3,675 ………. Monthly Cash Outlays

($477) ………. Tax Savings
($670) ………. Equity Hidden in Payment
$22 ………….. Lost Income to Down Payment
$79 ………….. Maintenance and Replacement Reserves
============================================
$2,629 ………. Monthly Cost of Ownership

Cash Acquisition Demands
——————————————————————————
$6,250 ………… Furnishing and Move In at 1% + $1,500
$6,250 ………… Closing Costs at 1% + $1,500
$4,584 ………… Interest Points
$16,625 ………… Down Payment
============================================
$33,709 ………. Total Cash Costs
$40,300 ………. Emergency Cash Reserves
============================================
$74,009 ………. Total Savings Needed
——————————————————————————————————————————————-
This property is available for sale via the MLS.
Please contact Shevy Akason, #01836707
949.769.1599……
sales@ochousingnews.com…..

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We're sorry, but we couldn't find MLS # S685798 in our database. This property may be a new listing or possibly taken off the market. Please check back again.

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	$245,000 5200 IRVINE Blvd #36		0.7 miles 2 bd / 1.75 ba 1,870 Sq. Ft.

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