What happens at the end of the fixed term; 3, 5, 7, & 10 year arm?
Each becomes a 1 year arm at the end of the fixed rate term. The new rate is determined for the next year by adding the agreed upon margin to the 1 year Treasury, or Libor Index (which ever was used) on the anniversary date. (example: margin 2.75% + index 1.5% = New Rate 4.25%). Of course there are always caps to consider and your rate may just increase or decrease by the cap amount. • How is a balloon different from an ARM? The balloon adjusts to the current 30 yr. Fixed rate, plus a small increase, at the end of the initial term, for the remainder of the loan. Certain conditions apply that must be met by the borrower at that time. • Why do I have to pay money at closing? If you decide not to roll any costs or prepaids (taxes, insurance and interest) into the loan amount, those monies are due at close. • If I pay extra on my principle how many years will that cut down on my mortgage? That depends on how much you pay. Your loan executive can calculate that for you. If you make (1) extr
