Is normal for a A R M to go up after 3 years or is there a chance it will go down, 1st time homebuyer?

Question

my ARM is coming due in feb, wanted to know if there is a chance it might go down, we are upside down in this house about 30,000 and dont know if we can get refinanced

Answer 1

There will be a reference to the margin on your note.

If you have the usual subprime 3/27 (3yr ARM with a 3 year prepay) the margin will be 4-5 over LIBOR... your rate and payment will go UP!

If you have a 3/1 conforming, the margin is not more than 2.5, and your rate will not go up much.

FHA SECURE http://www.hud.gov/news/fhasecure.cfm is the loan program FOR YOU. This program was part of the Stimulus Package last January and has been extended. Get with a mortgage professional who can help you SAVE YOUR HOUSE!

Best of luck!

Answer 2

Look at the index to which the interest rate is tied--to see if rate is going up or down

READ your mortgage, talk to your lender

ARMs can go down, but often have a floor rate below which they won't go

If your home has declined in value and is worth $30K less than your mortgage, you will be unable to refi

If your home has declined in value and is worth $30K less than when you bought it and you don't have more than $30K equity in home, you will be unable to refi

However, there's the new law which may help, check it out, just signed this week

Answer 3

ARMs never go down. look for your mortgage papers and find the 'Truth in Lending" paper. Search that paper for what the rate is and see what the max is.

example.. arm rate for 3 years is 5.00% at three years will jump 1.00%. with a max rate of 5.5% plus LIBOR (London International  Bank Offering Rate). So they can max out at aroune 11-13%. they will readjust every 6 months till it is maxed out