Stack Exchange Network

Stack Exchange network consists of 174 Q&A communities including Stack Overflow, the largest, most trusted online community for developers to learn, share their knowledge, and build their careers.

Visit Stack Exchange

Questions tagged [adjustable-rate-mortgage]

For questions related to mortgages where the interest rate is on the loan isn't fixed over time. Usually the rate is linked to an index reflecting the cost to the lender of borrowing on credit markets.

1
vote
1answer
61 views

What is the difference between the LIBOR data from the FRB and WSJ?

What is the difference between the LIBOR data on the US Federal Reserve Bank's website [https://fred.stlouisfed.org/series/USD6MTD156N] and the data published in the print edition of the Wall Street ...
3
votes
1answer
148 views

Formula for Calculating Periodic Fixed Payments with Multiple Rate Changes

I'm trying to figure out how to extend the formula provided by Chris Degnen in this previous question What is the formula for the monthly payment on an adjustable rate mortgage? to add in a third ...
2
votes
4answers
1k views

How to hedge an adjustable rate mortgage to lock in the current rate for the whole loan duration?

For a certain property my lender will only give an ARM (10 year fixed, 1 year adjustable afterwards), which is based off the U.S. Treasury rate. However I would really prefer a fixed rate mortgage. ...
14
votes
3answers
2k views

First time home buyer - Need suggestions and views on few things

We are a family of 3. Couple with one kid (2nd grade). We have been in states for 13 years. All these years we have been renting. So far I preferred to rent. But the rents are going up. Currently, ...
6
votes
2answers
23k views

What is the formula for the monthly payment on an adjustable rate mortgage?

Can people tell me how monthly payments are calculated when a mortgage has an initial rate? What is the formula? I have seen online calculators but not formulae. My guess is: We assume that the ...
1
vote
1answer
102 views

If/When the Fed raises the interest rate, how much will this affect my ARM?

I have a home equity line of credit with an adjustable rate. Currently (as it has been for quite some time), it's sitting at 3.5%. I understand that we're not sure how much interest rates will rise, ...
0
votes
1answer
117 views

Rate used for approval on a 5/5 ARM?

When applying for a 5/5 ARM with a 2% cap each adjustment, a 6% lifetime cap, that starts out at 2.5%, what rate will the lenders generally use to qualify you for the loan when computing your debt to ...
2
votes
1answer
151 views

How do margins on tracker mortgages (variable rate mortages) vary over time?

One kind of mortgage, in the UK at least, is a tracker: the interest rate is equal to the central bank's base rate of interest, plus a constant margin. The margin can apply for the lifetime of the ...
2
votes
3answers
1k views

Formula for variable rate Canadian mortgage

What is the formula for calculating payments on a variable rate mortgage in Canada? (This source says variable rate mortgages are compounded differently than fixed rate mortgages) Concrete example: ...
5
votes
1answer
259 views

How do reserve banks influence home-loan interest rates?

On the First Tuesday of every month the board of the RBA (Reserve Bank of Australia) meets and sets the target for the cash rate. I understand that they are trying to adjust the amount of money ...
8
votes
4answers
8k views

Will a 7/1 ARM be better vs a 30yr fix rate for a mortgage if I am prepaying part of the principal every year

I am a 1st time home buyer and I have just accepted a counter offer from a seller for a house that I like. The next step was to apply and get a mortgage for buying this house. Some background on the ...
7
votes
3answers
150 views

Under what circumstances might getting an ARM be warranted?

Specifically, I'm curious about the 7/1 and the 10/1 ARMs. I'm half-way seriously considering refinancing into one of these, mostly because I doubt I'll still be in this house in 7-10 years. I'm ...
3
votes
2answers
428 views

How is the 6th year on a 5/1 ARM calculated?

Given a 5/1 ARM for a $350,000 loan at a rate of 2.875%: After 5 years of paying at 2.875%, let's say the balance is $310,000. On the 6th year, the first adjustment kicks in an kicks the rate up 1% ...
2
votes
4answers
2k views

5/1 ARM: Lifetime cap, First Adjustment Cap, Margin, and Annual Cap?

I am looking over some paperwork for a 5/1 ARM. The loan information is as follows: Interest Rate: 2.75 Lifetime Cap: 5.00 First Adjustment Cap: 1.00 Annual Cap: 1.00 Margin: 1.75 I understand ...
5
votes
3answers
1k views

FHA Streamline Refi causes principal balance to increase $9000?

I am in the process of doing an FHA Streamline Refi from a 5% 30-year-fixed to a 2.7% 5/1 ARM. I will only have to come up with slightly less than the amount of my monthly mortgage payment at closing ...
4
votes
2answers
224 views

Should I renew the rate on my ARM to a lower one, considering the fees charged?

I have a 5-year ARM at 4.5% APR. I can renew the rate at 3.25%. However, that would cost $800. The current loan value is $156,219. Is it worth it for me to renew the rate? How long would it take to ...
12
votes
7answers
2k views

Want to refinance: 7-year ARM, 30-year fixed, or 15-year fixed?

We want to refinance; currently at 6% on a 30-year fixed. We are unsure how long we will be in the house but assuming at this time we will want to move within 7 to 10 years. We are offered a 3.75% ...