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5yr arm w/6.2% rate over in Jan18. Should I let rates adjust or refinance? The latter will be a bit difficult due to income and low credit score. If I let it adjust, will my rate be the current market rate(which is?), the same 6.2 or higher? Thank you!
asked Nov 19, 2017 in Refinancing by Shiuli Arshad

2 Answers

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Looking forward to the answer u receive from what I understand talk to lenders u could let it adjust because there is a cap now after all the nonsense from 2008 and was told in 10 yrs hasn’t moved much but let a expert tell u
answered Nov 21, 2017 by anonymous
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Hello. I am one of the mortgage editors here and a former loan officer and underwriter. At this time, 6.2 percent seems high. I would review my loan documents and see what your fully-indexed rate would be if your loan adjusted today. That is, look at the index on which your loan is based (many common indexes include the 6-month LIBOR, 1-Year CMT, or COFI). It's easy to find out what today's index is once you identify it. For instance, today's 6-month LIBOR is 1.63 percent. Next, your loan documents should specify a margin. The lender adds this to your index to come up with your rate. If your margin is 3 percent, for instance, your new rate would be 4.63 percent  (subject to other provisions that limit how high or low a rate can go in a single adjustment), Today, 30-year interest rates are lower than 4 percent, and 5/1 ARM rates are between 3 and 3.5 percent. Knowing this, and knowing that rates are unlikely to go lower in the future (and are trending higher), I would contact a few lenders and see what rate they'd be willing to give me. You may have enough equity to compensate for a few credit blotches (depending on how bad they are). It takes almost no time to do this at https://themortgagereports.com/ratequote and if you don't yet qualify, this is the time to improve your credit so that you can lock in a much better rate than 6.2 percent.
answered Nov 22, 2017 by GinaPogol (35,050 points)
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