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Reply to "Currently have an ARM when to refinance "
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[quote=Anonymous]Above poster is correct- you need to read the “Adjustable Rate Mortgage (aka ARM)” disclosure that you signed at closing. It will tell you your “initial” , “annual”, and “lifetime” rate caps. For a 7yr or 10yr ARM, these are generally something like 5%, 2%, and 5% respectively. So, the first (aka initial) rate adjustment could go up or down by 5%, then each subsequent (aka annual) rate adjustment could go up or down by 2%, and your lifetime cap is 5% up or down. The bank recalculates your interest rate by adding an index value (like the SOFR or US treasury rate) to a margin that they disclosed to you in your loan docs. When your loan readjusts it will generally be pretty close to current market rate. Since it will re-adjust every year thereafter, you will get the benefit or cost of however the current market rate moves. [/quote]
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