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Strategies & Market Trends : Tech Stock Options
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To: Kevin who wrote (29979)12/2/1997 9:59:00 PM
From: TimbaBear  Read Replies (1) of 58727
 
Sorry it took so long to get a response to this mortgage rate issue but.....maybe I can help, I'm a mortgage loan officer.

If you go with an adjustable rate, the real question becomes: what is the index and what is the margin.

The index is something like the 1 year T-Bill or LIBOR or something like that......the margin is usually the killer. Very often you get a margin of 2.75 but there is room to negotiate here.

The new rate is determined by adding the index and the margin and rounding up to the nearest 1/8th percent.

What you have to do is add the two together and compare them to today's 30 year fixed rate and you will get a feel for what your rate will be on the first adjustment if interest rates remain unchanged.

The next issue is what are the caps?.....how much can the rate change each year and how much over the life of the loan...very important!

You might want to consider a hybrid product, depending on your plans for your occupancy in the home....if you are going to make a housing change in 5 years, you may want to get a 5/1 ARM....this loan has a fixed rate for 5 years and then converts into a 1 year Adjustable Rate Mortgage.......rates on this product are pretty good right now.

If you have any questions that you think I might be of some assistance on, I'll be glad to help if I can.

Tim
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