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All indications point to rates to go up in 2014:

  • The Federal Reserve already is on course to reduce its monthly purchases of mortgage bonds and treasury securities by $10 billion per month.
  • The economy appears to be recovering albeit not to the Fed's expectation.
  • New federal regulations aimed at preventing another burst take effect on Jan. 10th requiring lenders to scrutinize income, debt ratios and credit. Marginal borrowers may be charged higher rates to compensate for higher risks.

Some economists predict that conventional 30 year fixed may go up to 5.5% by end of 2014. It is still a bargain - considering that it was 9.19% in 1974, 13.88% in 1984 and 5.84% in 2008.

Why Adjustable Rate Mortgages (ARMs) may benefit you:

  • If your time horizon to stay in that house is only for a few years, getting a 3, 5, 7 or 10 year fixed may save you hundreds of dollars per month.
  • In general rates for ARMs are about 1% lower than 30 Year Fixed. That translates to higher purchasing power and to remain within allowable debt ratios.
  • If you anticipate a promotion with salary increases - ARM is a good program to get you the dream house that you may not be able to qualify with conventional 30 year fixed.

Per chance if you are still holding the ARM when the note resets, here's what will happen. As your loan originator - I will go over all of your loan options for review.  

Posted by Sam Kader on January 5th, 2014 9:57 PM



Approximately 10% of current outstanding mortgages will reset in the next few years with majority of them in mid 2011. Depending on borrowers income and property valuation, refinancing may or may not be an option. ARM applications peaked at 36% in 2005 to currently at 6% as borrowers shift to a 30 Year Fixed loan.




Posted by Sam Kader on November 8th, 2009 8:09 AM

In order for you to calculate what your Adjustable Rate Mortgage will adjust to, you need to find out the following items:

  1. What the Index is. This could be COFI, Libor, CMT, CODI, and Prime Rate. Then check out from this website to ascertain what your current Index value is.
  2. What the margin is. This is usually fixed for the duration of the loan and could vary from .75% to 7%. 
  3. What the adjustment cap is. 
  4. What the lifetime maximum rate adjustment is.  

Example 1.

If your current ARM is 3%, Index Rate is 5%, Margin is 3%, Adjustment Cap is 4% and Lifetime Adjustment Cap is 12%. Then the new rate is 7% (Current + Adjustment Cap). 

Example 2.

If your current ARM is 5%, Index Rate is 5%, Margin is 3%, Adjustment Cap is 4% and Lifetime Adjustment Cap is 12%. Then the new rate is 8% (Margin + Index).

Example 3.

If your current ARM is 6%, Index Rate is 5%, Margin is 8%, No Adjustment Cap and Lifetime Adjustment Cap is 12%. Then the new rate is 12% which is the maximum Lifetime Adjustment.

In the above examples, we are to consider the lower of the two from the following calculations:

a) Current Rate + Adjustment Cap or

b) Margin + Index.

Please shot me an email or call me if I can assist you further.


Posted by Sam Kader on October 7th, 2007 12:19 PM



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