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.

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2
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0answers
52 views

What are the correct terms for a fixed payment with variable rate mortgage vs variable payment with variable rate mortgage?

What are the correct terms for a fixed payment with variable rate mortgage and variable payment with variable rate mortgage? I've read on some articles that a variable rate mortgage and adjustable ...
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1answer
53 views

Better loan option: PMI or Higher+variable interest?

I'm looking at two options for a home improvement loan (around $20,000): the first is a federal title 1 loan, which would be a fixed interest rate of around 4.5% (at the time of initial quote), BUT ...
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1answer
57 views

Combining adjustable rate mortgages and interest rate swap

The interest rates for mortgages are at a historic low. In order to be able to profit from low interest rates in the long term, fixed mortgages with long terms (10 years) are very popular. One problem ...
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1answer
77 views

Refinance a 15yr fixed to a 5/1 ARM?

I have about 6 years, 6 months left on a 15yr mortgage: Type: 15 year conventional mortgage (no PMI) Rate: 3.75% Balance: $64,780 Origination: 02/2012 Maturity: 01/2027 I am seeing 5/1 ARM refinance ...
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1answer
205 views

What determines the interest rate on an ARM mortgage?

I have a 5/1 ARM (2.8% interest rate) that started in May 2016. So I'm in my final year of the fixed rate period. What determines the rate the ARM will go to after the fixed period ends?
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2answers
114 views

When does 7-1 (or 5-1) ARM make sense for mortgage?

I have seen previous questions from close to 6-8 years ago on this subject and so I am asking here for: relevance to 2020 (esp in the context of historic low rates and Covid-19) from an inverted ...
1
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0answers
21 views

How would SOFR replace 12-month WSJ LIBOR?

Suppose an adjustable-rate mortgage loan was issued in 2016 and tied to "1yr WSJ LIBOR". Suppose the loan will start adjusting in 2023. Assume LIBOR will be phased out quickly after 2021 and de-...
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1answer
174 views

Refinance Cost is high

I got 30 years loan for 232K two years ago with interest rate of 4.25% and now I am planning to refinance again for 15 years. Financial company mentioned they can provide interest of 2.85% but the ...
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1answer
134 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
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1answer
227 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 ...
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4answers
2k 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. ...
16
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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, ...
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2answers
30k 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 ...
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1answer
115 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, ...
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1answer
126 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
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1answer
164 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 ...
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3answers
2k 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: ...
7
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2answers
364 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 ...
9
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4answers
9k 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 ...
8
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3answers
160 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
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2answers
595 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
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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 ...
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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
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2answers
237 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 ...
13
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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% ...