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Started By
Message
Question about my 5/1 arm mortgage.
Posted on 8/4/11 at 3:31 pm
Posted on 8/4/11 at 3:31 pm
So I am almost 5 yrs into my 5/1 arm home mortgage loan. At the end of 5 yrs, what rate will the mortgage adjust to? For example, what would the rate be today?
3
Posted on 8/4/11 at 3:39 pm to siliconvalleytiger
There is language in your loan docs as to how many points the rate can go up annually and then how many it can go up over the life of the loan. Expect it to go up the max that is allowed.
Posted on 8/4/11 at 3:41 pm to siliconvalleytiger
Check your loan docs. It's usually something like the 1 year LIBOR plus a fixed % (probably in the 2-2.25% range).
I have a neighbor with a 5/1 ARM and is last two rate adjustments were 3.25% and 3.00%. He was at 5% for the intial 5 year period.
The previous poster's assertion that the rate will jump to the max is patently false. Depending on rates during your adjustment period it may go down or up.
I have a neighbor with a 5/1 ARM and is last two rate adjustments were 3.25% and 3.00%. He was at 5% for the intial 5 year period.
The previous poster's assertion that the rate will jump to the max is patently false. Depending on rates during your adjustment period it may go down or up.
This post was edited on 8/4/11 at 3:49 pm
Posted on 8/4/11 at 3:48 pm to Martavius
Thanks. When you say the adjustment was 3%, is that the fixed rate that gets added to the libor? Sorry, a novice at all this.
Posted on 8/4/11 at 3:49 pm to Martavius
DAMN! I havent had to check LIBOR rates since 2007...didnt realize it was that low.
Posted on 8/4/11 at 3:50 pm to siliconvalleytiger
The interest rate he's paying for this 12 month period is 3%.
Posted on 8/4/11 at 10:24 pm to Martavius
quote:
The interest rate he's paying for this 12 month period is 3%.
Most adjustable rate mortgages are a predetermined interest rates ON TOP OF the LIBOR.
In other words, 7-9% PLUS the London Interbank Overnight Rate (I think that's what it stands for, LOL).
I hate to say it, but if you sign an ARM loan of any length, & you aren't sure what its going to adjust to...then you have absolutely no business signing the paperwork in the first place.
That's absolutely frightening. But, unfortunately, I closed my fair share of ARM's in my day...
Posted on 8/5/11 at 12:45 pm to GFunk
Libor plus 3%. My monthly payments will be much lower once my 5/1 expires.
Posted on 8/5/11 at 12:47 pm to siliconvalleytiger
quote:
Libor plus 3%. My monthly payments will be much lower once my 5/1 expires.
If libor stays low...
Posted on 8/5/11 at 12:58 pm to GFunk
quote:
In other words, 7-9% PLUS the London Interbank Overnight Rate (I think that's what it stands for, LOL).
7-9% plus LIBOR. Uh...no. They're normally 2-3% plus 1 year LIBOR. In my neigbor's case, his was 1 year LIBOR plus 2.25%. The 1 yr LIBOR rate at the time of his adjustment was 0.75%. Hence the 3% interest rate for 12 months.
This post was edited on 8/5/11 at 1:00 pm
Posted on 8/5/11 at 1:03 pm to siliconvalleytiger
quote:
Libor plus 3%. My monthly payments will be much lower once my 5/1 expires.
This is assuming it wasn't interest-only during the AR period or that it wasn't a pay-option where you were paying less than owed.
Posted on 8/5/11 at 4:47 pm to Tiger JJ
I had a 7 year ARM end this year and my current 12 month rate is in the 3s. Will probably refinance sometime before the end of the year, but for now I'm content.
Posted on 8/5/11 at 5:43 pm to Tiger JJ
quote:
This is assuming it wasn't interest-only during the AR period or that it wasn't a pay-option where you were paying less than owed.
Not interest only and nor was I paying less than owed. It was a pretty standard 5/1 arm at the time.
Posted on 8/5/11 at 5:45 pm to C
quote:
If libor stays low...
Libor rate will lock in for a yr. And even if interest rates increase the following year, I am protected by a cause that says the rate increase cannot be greater than 1% yr over yr. I am pretty much looking at 3-4% over the next 2 yrs. If I want an even lower rate, I can always refinance as I do have the sufficient equity in my house now.
Posted on 8/6/11 at 12:33 am to siliconvalleytiger
The ARM's I closed were mainly 2/28's & 3/27's, and once they popped out-which you were an absolute dolt if you let them-they adjusted every 6 months.
Posted on 8/6/11 at 8:36 pm to Vrai
Jeff lautenberg a senator from nj said the libor rate are the real conspiracy amongst all of the economic shenanigans a few years ago.
Posted on 8/6/11 at 8:39 pm to Vrai
Jeff lautenberg a senator from nj said the libor rate are the real conspiracy amongst all of the economic shenanigans a few years ago.
Posted on 8/6/11 at 10:03 pm to siliconvalleytiger
Your new rate will be the current index rate, which may be the LIBOR, plus the margin. However, you may have a floor which it cannot go below as well as a ceiling that it cannot go above.
As stated earlier, most of the conforming ARMs have low margins and are adjusting downwards from their initial rates. That may be about to change, who knows how the markets will react Monday morning.
As stated earlier, most of the conforming ARMs have low margins and are adjusting downwards from their initial rates. That may be about to change, who knows how the markets will react Monday morning.
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