5/1 ARM Question
My 5/1 ARM is due to adjust in August. It’s currently at 5.35 and will adjust based on the WSJ Libor 1 year rate. The first adjustment is meant to be +2.25 with a max cap of 10.35 and min of 2.25. The latest index rate is 0.86. Let’s say this rate stays around the…
My 5/1 ARM is due to adjust in August. It’s currently at 5.35 and will adjust based on the WSJ Libor 1 year rate. The first adjustment is meant to be +2.25 with a max cap of 10.35 and min of 2.25.
The latest index rate is 0.86. Let’s say this rate stays around the same rate for the next 5 months or so. Can I expect my mortgage rate to go down significantly?
Sorry, math and mortgages aren’t my forte but if I am calculating this right, is it possible that my adjusted rate could be 3.2range? Or am I missing other calculations from this equation?
Thanks for any insight.
this is what happened to a 1/5 arm I have. Supernice, to see your payment adjust down! In my case the rate rests every year so I will probably refinance at the end of that year. Just keep an eye on interest rates and lock in a 15yr/30yr mortgage before the Fed starts to raise the rates again.
one thing to consider is continuing to make you current (pre adjustment) payment so that you pay down principal.
funny, everybody I know in London have variable rate mortgage linked to LIBOR
Well, at the rate I’m at now and for the next 2 years I don’t think I’m going to do better. I guess I am willing to take my chances. The money I save with the mortgage being at 3.12 in one year alone would go a looong way towards covering any closing costs when/if I do refinance.
Any reason your not considering locking into a 15 or 30 year fixed?
The rates will likely continue to inch up, but you would be protecting yourself for the future, especially if inflation kicks into high gear (no major signs of this yet).
Yes it can go down. Lots of people with ARMS have rates in the 3% range currently.
Most LIBOR ARMS have a margin of 2.25% with an idex today of .87 these people have adjusted rates of 3.12% today.
Question is how long to ride the wave.
Yes it happens… my rate went down by 2% last year after the 5 year fixed period.
Way to play the ARM game!
drinks on you?