2007-10-31 08:12:15 · 6 answers · asked by T. W 1 in Business & Finance ➔ Renting & Real Estate
what's the terms of your mortgage? If you are tied to a short term index it will help when it resets. Then you may have to wait until the reset date, which may only occur once a year.
2007-10-31 08:18:36 · answer #1 · answered by redwine 6 · 0⤊ 1⤋
Your loan's rate is not tied to the Fed Rate.
Yu can call the bank servicing your loan and fired out what your rate is tied to. They will give you 2 things:
1. Index = this is what the rate is tied to
2. Margin = this is the profit the lender makes in addition to the Index.
By watching the Indexes in the newspaper or online, you can understand what will be happening with your rate before it adjusts so you aren't caught off guard.
Ask the lender to explain WHEN the loan will adust, whether it is yearly or every 6 months. And have them explain the Caps. Caps are placed on how much the rate can adjust within a specified adjustment period.
Ex. Caps are 1/2/6 and that means that the loan can adjust up to 1% up or down the first adjustment(1st number). Then the loan can adjust up or down a maximum of 2% on each subsequent adjustment(the second number). Then, finally, the loan can adjust a maximum of 6% over the life of the loan. So if the Index goes up 10% your loan can anly go up a maximum of 6%.
2007-10-31 09:00:47 · answer #2 · answered by DallasLoanGuy 2 · 0⤊ 0⤋
It doesn't affect you ARM because it is the rate that the government sets for when banks loan money over night to other banking institutions. It has nothing to do with mortgages or short term loans, or interest bearing accounts, or long term investments for us little people. It only affects the very richest folks. This is still part of that failed "trickle down ecconomy". Which turned out to only benift the very rich. It suppose to have created situations where these rich institutions/ businesses, past on the wealth to those under them, but we all know how the rich so love to share! lol
2007-10-31 08:18:24 · answer #3 · answered by Serenity 7 · 0⤊ 1⤋
Fed cutting rates destroys the dollar.
Foreign investors demand a higher interest rate to compensate for the destruction of the dollar.
Therefore, interest rates rise NOT FALL!
Hope this helps.
Terry S.
2007-10-31 13:00:30 · answer #4 · answered by Terry S 5 · 0⤊ 0⤋
Because the Bank wants your pound of flesh.
When the bank created your loan initially, they created that money from nothing. The only thing of value in the whole transaction was your pledge to repay the debt.
Research "Fractional Reserve Banking", or watch "Money as Debt" to see why banks are so corrupt, and getting worse.
2007-10-31 20:15:41 · answer #5 · answered by Anonymous · 0⤊ 0⤋
It may if your ARM is tied directly to the prime. But now days ARMs are tied to indexes and only adjust once per year.
I would suggest you get your loan docs out and read them cover to cover. Pay attension to the part that talks about adjusting the rate.
2007-10-31 08:18:06 · answer #6 · answered by DonPedro 4 · 1⤊ 1⤋