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ARM maturing.....never knew payment could drop!
Old 06-30-2009, 11:11 AM   #1
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ARM maturing.....never knew payment could drop!

I have a 5/1 ARM coming due in Oct of this year on a piece of rental property. I called the lender and they told me that if it came due now, the principal and interest payment would drop about $130.00 a month! I had NO IDEA that an ARM could drop. I figured it would at least stay the same.


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Old 06-30-2009, 11:38 AM   #2
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SWEET! Very nice for you!

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Old 06-30-2009, 11:44 AM   #3
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Can you go ahead and renew it now? That would be awesome and who knows what will happen in the next four months to interest rates.
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Old 06-30-2009, 03:23 PM   #4
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I have two rentals that are on 5/1 ARMs that started back in 03. They are tied to the 1 Yr T-bill plus 2.75% and can only adjust 2% a year when they adjust. One is at 4% and the other just adjusted to 3.25% I started at 5% and 4 1/8%. I have definatley been on the winning side of this deal.

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Old 06-30-2009, 03:41 PM   #5
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The TV shows all start featuring families whose mortgages went down!

I recall a steady stream of "whoa is me" clips of people on the "news" complaining that their adjustable rate mortgage.... adjusted! Their life was going to be ruined, the bankers were greedy SOBs, etc. But I haven't seen any showing the smiling faces of people that are getting relief from these rate reductions, and sending flowers to their bankers. Doesn't make a good story I guess.

We had a reporter looking for stories here not so long ago. He/she specifically wanted to hear from people who were hurt by an ARM. I got no response when I said my ARM went down 2 points last Dec. Imagine that.

Now, it had gone up 1.375 the previous year. Limit is 2 points per year.

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Old 06-30-2009, 05:43 PM   #6
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If your rate is tied to LIBOR it's definitely going down.
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Old 07-01-2009, 05:17 AM   #7
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Originally Posted by Zubini View Post
If your rate is tied to LIBOR it's definitely going down.
It is! 2.25 percentage points X LIBOR (which is currently around 1.60000%). My ARM initial iterest rate is 5.875%. The best rate I can get for a fixed refi is 6.20% with 0 points.

I've had this property for about 23 years now and currently owe more on now than I did when I bought it in 1986. It's been rental property since 1989 with positive cash flow that's been put in the bank. I was in the Navy and transferred overseas and have not been back to the state it is located in. The property has a good amount of equity in it, and I have no intention of ever living in it. I believe I have about 7 more years to depreciate the property tax wise. My plan is to keep my payments as low as I can, and put it on the market for sale once the market picks up again (if it ever does)


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