2006-08-03 12:57:24 · 4 answers · asked by sunny 1 in Business & Finance ➔ Credit
My current interest rate on my mortgage loan is 5%. The mortgage company said after one year I have to add 2.75 % to the index rate at that time. Is consumer price index and current index rate both one and same?
2006-08-03 13:40:35 · update #1
Most of the time, it is the prime rate (the rate at which banks lend to their best customers, currently about 8.25%).
2006-08-03 13:13:43 · answer #1 · answered by F. Frederick Skitty 7 · 0⤊ 0⤋
There are many indices that are used for ARMs. YOu need to look at your mortgage documents. Some common ones are LIBOR, Treasury Constant Maturity, Prime Rate, Cost of Funds. Pick up a copy of the wall street journal or go to http://www.federalreserve.gov/releases/h15/update/
Judging from your spread, it applicable index is probably LIBOR or the 1 year T-bill.
The consumer price index is index used to guage inflation not an interest rate index. The CPI doesn't make any sense in that context for a number of reaasons- the not obvious is that the CPI can go nexagive while nominal interest rate can not.
2006-08-03 13:59:07 · answer #2 · answered by Homer J. Simpson 6 · 0⤊ 0⤋
not the index rate. it the fed fund rate or prime rate.
In your situation. try to lock in fixed rate before it's expire. you will be shock to see the morgae payment shooting to the roof
2006-08-03 18:52:02 · answer #3 · answered by Hoa N 6 · 0⤊ 0⤋
Whatever the Feds make it...
2006-08-03 13:31:20 · answer #4 · answered by J. T. N 4 · 0⤊ 0⤋