Posted on: 23rd Feb, 2011 08:18 am
Currently I have a 30 year home loan adj rate at 7.625 % with a 5/1 year arm. My rate is to be reset in Oct 2011. Being that i am upside down on my house and cannot refi i would like to estimate what my loan will be based on current market trends with the libor index if my rate will decrease/increase and aprox amount of how much. Not sure what to expect.
Margin for my mortgage company is 2% and they can only adjust once a year.
Margin for my mortgage company is 2% and they can only adjust once a year.
according to Bank Rate the Libor 12 month index is currently at .79%
That added with your margin of 2% would put you at 2.79% - but of course they are not going to let you have that rate right away. In your adjustable rate rider should be a statement about the max it can adjust. Most are 2% on the first adjustment and 1% there after - so if you are 7.625% it will go down to 5.625% - Don't forget to add in principal if you are currently paying interest only - Also if adjusting from interest only to fully amortized the amortization schedule will be over the remaining 25 years -
Hope this helps
Brian
That added with your margin of 2% would put you at 2.79% - but of course they are not going to let you have that rate right away. In your adjustable rate rider should be a statement about the max it can adjust. Most are 2% on the first adjustment and 1% there after - so if you are 7.625% it will go down to 5.625% - Don't forget to add in principal if you are currently paying interest only - Also if adjusting from interest only to fully amortized the amortization schedule will be over the remaining 25 years -
Hope this helps
Brian