as stated above, when this happened, my mortgage company increased my interest rate from 7.3 to a full 10%. Is this amount past legal, or should it have dropped to the current interest rate?
2006-06-12 03:49:54 · 4 answers · asked by slivers 7 in Business & Finance ➔ Renting & Real Estate
The mortgage you have is an ARM, or an adjustable rate mortgage, not a fixed rate mortgage.
Generally, the floor rate is the same as the initial rate and the margin on some sub-prime loans is the same as the initial rate also so you'll end up with a higher rate after the initial fixed period of 1 month to 10 years or more. Most sub prime loans are 2 or 3 years fixed.
The margin + the index determines your rate and usually adjusts every 6 months or 1x per year.
ARMs can be a good option, but carefully consider the length of the prepayment penalty and choose a fixed rate if possible even though the rate may be higher, especially if you are planning to live in the home more than few years past the "fixed" period of your ARM. NEVER accept a 3 year prepayment penalty on a 2 year ARM and remember that you can rescind on a deal within 3 business days if it is your primary home being refinanced.
There are a few unethical mortgage brokers out there that give the rest of us a bad reputation, but I always explain the terms of the loan completely and recommend the best options. If your mortgage broker doesn't, it's time to find another one.
2006-06-12 07:22:09 · answer #1 · answered by mortgageguy 2 · 0⤊ 0⤋
You had a short term fixed rate. There is nothing illegal about it. Take your note to an attorney and have him explain it to you. Then find a good mortgage broker and refinance, but have someone help you with this next refinance.
2006-06-12 06:35:34 · answer #2 · answered by DAVID MUCKELVANEY 1 · 0⤊ 0⤋
Somewhere in all of those papers that you signed is the one that says "prime plus ____%, increase every ____ months, never lower than 7.3%". You need to refinance now, before the Fed raises the rate any higher.
2006-06-12 05:03:46 · answer #3 · answered by Sharingan 6 · 0⤊ 0⤋
WOWOWOW RESPECTFULLY THEY DID RIGHT SOMEONE SHOULD OF TOLD YOU THAT U NEED TO FINANCE AFTER 2YR THAT MEANS START WORKING ON THIS BEFORE 2OR 3 MOS BEFORE YOUR 2YRS IS UP AND U NEED TO GO FINANCE NOW BECAUSE LET ME TELL YO IT WILL NEVER GET LOWER IT WILL ALLWAYS KEEP GOING UP READ YOUR MORTGAGE PAPERS IN SOME INSTANCE IT WILL GO UP EVERY SIX MONTHS GET OFF YAHOO CONTACT YOUR BACK OR ANY OTHER MORTGAGE BROKER AND TELL THEM U WANT TO REFINANCE NOW OR YOU WILL BE BACK ON HERE TELLING US THEY SCREWED U AGAIN PLEASE GO REFINANCE NOW POOR THING.
2006-06-12 03:54:36 · answer #4 · answered by jcleann13 4 · 0⤊ 0⤋