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Written By: Gary on September 26, 2009 One Comment

I originally purchased my condo almost ten years ago. I purchased it with a five-year ARM (Adjustable Rate Mortgage) which means that after the five years my interest rate changes once a year. Since I never thought I’d live here five years, let alone ten it seemed like a good option for me. I’m still living here and due to a variety of circumstances my rate never started fluctuating until last year (see my ARM story from last year).

I was pretty happy when my mortgage rate only jumped up a little last year, but with the economy even worse this year my rate actually dropped 1.625% to a new total of only 3.25%! I know this shows the economy isn’t very good right now, but (while I don’t really talk about it) my personal economy isn’t so great right now either, so this is really a good thing for me.

I believe my mortgage rate is is based on a margin of 2.875% plus an index (1 year treasury-bills) which is currently 0.40% so that makes that a 3.25%. So unless the index can go less than 0.0.% (and I don’t think it can) I’m pretty much as low as it can go.

FYI, My mortgage was bought up by HSBC as soon as I got it (within hours) and they’ve been a pleasure to work with. And to get my mortgage, my first mortgage, my bible was Mortgages for Dummies. Also, Here’s a place to get the current and past rates from the U.S. Treasury.

Written By: Gary on September 26, 2008 2 Comments

So it’s that time for my five year ARM (Adjustable Rate Mortgage) to start adjusting. Was a little nervous because I didn’t know how it would go. It could have go up 2% but it only jumped from 4.25% to 4.875% so I’m pretty happy about 5/8ths of a percent (it’ll stay that rate for the next year). What I couldn’t understand was why my payments dropped if the rates went up? Turns out they recalculated my mortgage based on what I currently owe and since I’ve been paying extra on my mortgage it went down; so even though my interest is going up $45-ish a month it actually dropped my monthly payment.

I’ve had a really great experience with my first mortgage. I set it up with a local company and it was immediately sold to HSBC (it was sold so fast; I signed Friday at 4 pm and Monday I got HSBC paperwork dated from Friday). I purchased the five year ARM at 6.875 interest (I think I paid a small amount for points to drop it 3/8 of a percent) then a few years later I had them redo my interest rate to 5.25% with just a phone call (and a $750 processing fee on my MasterCard) and then I did it once more (5 years ago) to 4.25% for another $750 phone call. The phone call required no paperwork, just them checking my credit and my payment history. So I managed to stretch this 5 year ARM out to almost 9 years while dropping my interest rate in the mean time.

It’s worked out quite well for me (other than the fact that housing values have dropped) especially since I never thought I’d live here even 5 years :)

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