Need help could someone tell me how read this Mortgage?

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What does 1 years fixed 2.65% what does that mean?
As the years go up that % is getting more why is that?
Does that mean prime is inculded.
is this a term loan?
1 Year Fixed Rate Mortgage 2.650% 3
4 Year Fixed Rate Mortgage 3.990% 3
5 Year Fixed Rate Mortgage 4.090% 3
5 Year Fixed Rate Green Mortgage 4.390% 3
5 Year Closed Variable Rate Mortgage 2.150% 7
7 Year Fixed Rate Mortgage 4.950%
10 Year Fixed Rate Mortgage 5.200% 3

  1. Reply
    May 19, 2011 at 2:21 am

    These appear to be either terms or rates available to you. I do not understand the numbers 3 and 7 after the notation.

    Probably they are offering you 7 different options, and you make the choice as to how long you want to bite off until you must pay off or/and refinance. Either the 7 or the 10 year options would be acceptable, assuming no pre-payment penalties.

    If you meant something else, please addend your question. Thanks

  2. Reply
    Tweeter & the MonkeyMan
    May 19, 2011 at 3:02 am

    Without more context, this is hard to do – a lot will be guess work.

    Basically, you are seeing two types of mortgage here:
    ( xx year) fixed rate mortgage ( YY%)
    ( xx year) variable rate mortgage ( yy%)

    generally, as the term of your loan goes up ( longer years), the interest rate is higher.
    this is especially true with both our current economy, and speculation on where the future will go.

    Reasons: first, “they” ( bank , credit union, mortgage investor) are lending you money so that they can make a profit. Right now, CDs (certificate of deposit) and municipal bonds are low risk, and very low interest. If you check with banks – leaving your money with them in a CD for a longer time means you get a better interest rate. If I have a choice of investing in your mortgage, or with a bank – there needs to be some incentive. so, investing in a mortgage is a higher-priced thing than a regular savings bond or CD. And, like those things, the longer that investor’s money is locked in, the higher the interest rate will be.

    second, there is always some risk involved. If I have a mortgage, and I always pay on time – have a great job, and a great credit rating.. there is still a chance that my house could get struck by lightning and burn to the ground with me inside. I might not have enough savings or insurance to pay back the mortgage. So, right away, a mortgage has more risk than a CD or savings bond, and even though the chances are very small – every day I have the loan open, there is an accumulating chance that something catastrophic may happen. Because there are a lot of liitle chances that something could go wrong, or I might miss a payment, again – the longer the loan means a higher interest rate.

    Nothing in the information you gave here indicates that these are Term loans or that any prime is included.
    Usually – Variable Rate mortgages are tied to some scale or prime.. maybe the Fed lending rate, or LIBOR, or some other indicator. That is usually in the notes or fine print about your particular mortgage.

    Basically, a 1 year Fixed rate mortgage means you pay everything in full within12 months, and the interest rate is fixed right up front.
    A 5 year fixed – means you pay in 60 months, and the interest rate is fixed – stays the same – for the entire term.
    (everything is plus interest which gets compounded.. and possibly ‘points’ which you don’t mention.)

    A variable rate mortgage is something where you know what the starting interest rate is.. for ” 5 Year Closed Variable Rate Mortgage 2.150%” we know it starts at 2.150%. There are a lot of other things to figure here.
    – if the entire term is 5 years, or does this rate get fixed for the first 5 years of some longer term?
    .. then, how is the rate determined ( is it prime + some number?) , how often can the lender change the rate ( every month, every 6 months, once a year?) .. and is there a cap ( for instance, no more than 2% per year, and no more than 9% over the life of the loan) ??

    I’ve seen mortgages presented in other ways..
    when I see a 10/1/30 Variable mortgage.. I know that the initial rate is locked for 10 years. the total term is 30 years, and they can change the rate every 1 year after the first 10.
    Lenders usually present both a “Rate” and an “APR”. The rate is what they are saying the interest is. The APR is what you are really paying, when you include other expenses, like ‘points’, mandatory insurance, and any other expenses in the contract.

    The 3’s and 7s at the end of almost every line may be footnotes ( from a copy we can’t see).. or they may be “points”. In many mortgage arrangements, the lender will discount the interest rate if you pay a certain percentage of the loan off right up front. It is fairly common to see a 0.5% discount on your interest rate if you pay 3 points ( 3% of your entire loan) up front.

    Like I said – this is all speculation. These aren’t regulated like an ingredients label on food. (yet)
    Mortgage lenders and brokers can say a lot of misleading things in advertisements. Even when we think we understand what’s going on – the only ‘real’ promise is the long, legalese-laced contract that is signed upon the closing. Make sure you have a good lawyer represent you in ANY mortgage transaction.

  3. Reply
    May 19, 2011 at 3:45 am


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