May 8, 2012

It’s Official

My mortgage rate (still a 5/1  ARM) adjusted again. I thought it was going from 3.00% to (wait for it) 3.00% – that’s what the letter from my credit union said. But when I went to check my accounts, I noticed that my mortgage rate said 2.875%. Huh? Of course, I need to be sure about these things. So I called my credit union and explained my problem. They said they’d call me back after researching.

When they called back, they assured me that it did adjust to 2.875% (that’s 1% lower than the original, something I never expected to see). And today I got the mail, and with it came the letter confirming the rate. The credit union said they’d referenced the wrong index when they sent the original letter, and they have procedures in place now to make sure this doesn’t happen again.

On one hand – hey, less interest! I’ll keep my payment the same (it’s now $925 and change, we pay $1,000). This adds up to nearly one whole extra mortgage payment over a 12 month period! I might just have to add in a couple dollars just to make sure it actually is a whole extra payment. That’s something I wanted to do from the moment I got a mortgage, and I never had the flex in my budget to do so. How exciting is that!  According to this calculator, if I had a loan at 3.875% for 30 years for 210,000, and starting in June I paid 75$ extra per month, the extra payments will allow me to pay off my remaining loan balance 2 years and 4 months earlier. Paying off my loan sooner will save $10,291.60 in interest over the life of the loan. Yow!

Of  course, the fact that I have an adjustable rate mortgage means lots of things: I cannot predict where my rate will go in the future, and I can’t compensate for the payment adjustments I’ve had so far. It’s just a guestimate. Still, it’s exciting! Anyone know of a calculator that you can enter your yearly adjustments to date and predict how they’ll go in the future? Please let me know! At this point, the best I can do is be sure it will never go over 8.875% and it would take at least 3 years to get that high (and honestly, markets are not looking that good for that happening soon).

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