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LIBOR Question


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Hello Everyone,

I figure that there is someone here that can help me. I took out a 2/28 ARM in May of 2005 at the time the Libor rate was 3.7789 and my Interest rate was 7.7%. I know that the Libor rates have increased since may of 2005 and now are at 5.3328. My current payment is $1555.00 per month could someone tell me what my new monthly payment and interest rate will be. Thanks for any help you can give.

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My current payment is $1555.00 per month could someone tell me what my new monthly payment and interest rate will be.


All you would do is add that new LIBOR Index to whatever the margin was on the loan that you received. Ya gotta pull out that big packet of documents that you received when you closed the loan and find one document called the "NOTE" That's all it will say @ the top.

That "NOTE" will state what your margin is and then you add that to the index to equal your new interest rate. That 7.7% will go away completely and be replaced by this combo of "Index + Margin" and recalculate every 1, 6, or 12 months. Depending again on what the note says about how often this index adjusts.

After that just find an online mortgage calculator to calculate your new monthly payment like this website here www.mortgage-x.com

This site is awesome for mortgage education.

In your case it won't matter right now until you have made a total of 24 monthly payments. It will start to adjust to this "Index + Margin" calculation on the 25 payment . It's fixed for the first 24 payments and if you made your first payment in May 2005 it will start to change this coming June.

Call your mortgage broker back and get him to see if he can get you a better deal if you expect your payment will go up. A good margin on your loan will be around 2.0 to 2.5. If the bank or broker gave you a margin of anything higher than a 2.25% over the last two years then he's got some explaining to do about how much the lender paid him in addition to the fes he charged you. :roll: :roll:

Good luck and make it a great day. email or call me if you have any other additional questions.



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