What’s today’s index rate if I am up for the 5-year ARM loan for adjustment?

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I have a 5 year ARM mortgage and it’ll be 5 years soon. The loan ($ 120k) is too low for refinance with no cost, and I only plan to keep the property for another year. So I am just wondering what’s the new rate it’ll be on the loan? Currently it’s 4.625% for my 5 years, but I heard the new rate is tied to the “index rate”. Could someone explain what this index rate is and how can I figure out what rate I’ll end up with if my loan is being adjusted. Thanks!

  1. Reply
    April 29, 2011 at 11:03 pm

    Check out bankrate.com. They update rates daily. The 5/1 Arm is 4.32% today.

  2. Reply
    April 29, 2011 at 11:49 pm

    Your mortgage agreement says what index will be used. Without that info, nobody can answer your question.

  3. Reply
    April 30, 2011 at 12:24 am

    There are several index rates used by various different lenders. To find out which index rate your mortgage is based on, you’ll have to consult the mortgage papers or your lender. Depending on which index it is, it may vary daily, monthly, quarterly, etc. The mortgage papers will specify not only which index to use, but also where to find the information, and the date on which your rate adjustment will be based. Often a mortgage will say “as published in the Wall Street Journal on the last business day of the preceding quarter,” or some such reference.

    Be aware that the “index rate” isn’t the same as your adjusted rate will be, unless the “margin” in your mortgage is zero (0%). The “margin” is a percentage usually added to whatever the index amount is, to determine your mortgage rate.

    So here’s the info you need to get, either from your own papers or from the mortgage company:

    1. Which index rate is used to determine your new rate?
    2. What is the date on which that index is determined, and where is the information available?
    3. What is the amount of the margin?
    4. What is the effective date of the rate change?
    5. How is the new payment calculated?

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