Mortgage Mess - Adjustable Rate Mortgages

How adjustable mortgages work - BEWARE...!

Category:

Education

Tags:

• REAL
• ESTATE
• MORTGAGES
• ADJUSTABLE
• RATE
• LOANS

[realtor527]

Sounds great. Watch the fixed rates though. If they get low enough consider the positives and negatives (a new 30 yr loan) of refinancing and see what makes sense in your particular circumstance. As the economy improves your interest rate will increase accordingly.

[realtor527]

In the long run you will be better off refinnan- cing because at some point in time your adjustable rate will exceed fixed rates. But then it all depends on how long you plan on living where you are.

[realtor527]

In your case you might be better off holding off on refinancing but be aware that fixed rates may increase. Since you now have 25 years left on your mortgage when you refinance you will add 5 yrs because you will have a new 30 yr loan. However the payment will probably be lower because the principal is less and the amortization will be 30 yrs. You have to decide what is best for you.

[KARStarla]

I have a VA adjustable rate, I would think its tied into a T bill, if I'm at 5.25% and my 5 year period is up this year, should I refinance to a 6% (which is higher) now to lock into that rate?

I was under the impression it would go up but because my mortgage was for $150,00 at 5.25% that now (my mortgage balance being 122,000 because I pay extra) would be around 6% to 6.25 % on my current $122,000 balance.... I was wrong to assume that I'm thinking??

5.25% to 9% in one adjustment?

[realtor527]

You need to check a couple of things about your loan. First, what is the margin on the loan. You will find that in your loan papers. Now find the current index which changes on a monthly basis. Add the 2 to find your new loan rate (or call the bank they will know). How often does your loan get adjusted. Once per year or every 6 months. Compare your current rate and payment with the new rate and payment to see that it has not increased substantial-

ly.

[KARStarla]

Ok I got good news, it can adjust now only once a year and I just found out mine has gone DOWN (thank God!) Instead of paying 5.25 I will now be paying 4.25 this year. A lower differnce of $100 a month (relief!)

My index is 4.95 and my margin 2% fixed but it also has a fixed ceiling rate of 9.25.

I'm glad I did not refinance to a fixed at 6.25 because I'm paying 4.25 now (and on a much lower balance). My mortgage will be paid off in 10 years by the time it gets to 9 I'll be kool I think