Real Estate Home Loans in Boise Idaho, Benchmark Mortgage - Prime Equity Group: Idaho: McCall

If your ARM is due to adjust this spring, your best move may be to allow it. Don't rush to refinance - your rate may be adjusting lower. It's because of how adjusted mortgage rates are calculated.

First, let's look at the lifecycle of a conventional, adjustable rate mortgage:

1. There's a "starter period" of several years in which the interest rate remains fixed.
2. There's an initial adjustment to rate after the starter period. This is called the "first adjustment".
3. There's a subsequent adjustment until the loan's term expires. The adjustment is usually annual.

The starter period will vary from 1 to 10 years, but once that timeframe ends, and the first adjustment occurs, conventional ARMs enter a lifecycle phase that is common among all ARMs - regular rate adjustments based on some pre-set formula until the loan is paid in full, and retired.

For conventional ARMs adjusting in 2011, an example of that formula is most commonly defined as:

(Index = 12-Month LIBOR) + (Margin = 2.250 Percent) = (New Adjusted Mortgage Rate)

LIBOR is an acronym for London Interbank Offered Rate. It's the rate at which banks borrow money from each other. It's also the variable portion of the adjustable mortgage rate equation, or the Index. The corresponding constant is typically 2.25%, or the Margin.

Since March 2010, LIBOR has been low and, as a result, adjusting mortgage rates have been low, too. In 2009, 5-year ARMs adjusted to 6 percent or higher. Today, they're adjusting near 3.000 percent. That's a big shift. 

Therefore, strictly based on mathematics, letting your ARM adjust this year could be smarter than refinancing it. You may get yourself a lower rate.

Either way, give us a call (208) 287-1717. With mortgage rates still near historical lows, Eagle homeowners have interesting options. Just don't wait too long. LIBOR - and mortgage rates in general - are known to change quickly.

A significant decline in jumbo mortgage rates (loans above $417,000) are helping to move some of the highest-end inventory.  Sales volumes of homes worth more than $1 million across the country are up more than 35% from this time last year according to the National Association of Realtors. They also stated that homes between $700,000 and a million were up 29% from last year.

There is no question that high unemployment and concern about the economy is pressuring the housing market at all price points, but it is clear that the ultra-low mortgage rates are having a dramatic impact on the highest end of the price spectrum.

Conventional lenders (Fannie Mae and Freddie Mac) do not make jumbo loans.  Those loans usually are held by banks.  These banks are becoming more comfortable making higher end loans these days and are looking to take advantage of a premium that they just can't earn with a conventional mortgage where their margins are simply too thin.