We got a letter reminding us that the interest rate on our mortgage is adjusting on May 1. Our interest rate will drop a quarter of a point. Thanks, Dr. Bernanke!
I had figured this out before we got the letter. It’s not difficult at all. First, I looked at our loan paperwork and found the list of details I’d need:
- The date of our reset
- The number of days before the reset when the new rate would be determined
- The index to check (for ARMs like ours, it’s usually the weekly average yield on one-year U.S. Treasury securities)
- The margin to add to the index value
- The way to round it
On our loan, they use the most recently published data 45 days before the reset. So, looking at the Federal Reserve’s information, I saw that as of March 17 (45 days before May 1), the most recent data was 1.52%. I added the margin given in the loan documentation and rounded to the nearest eighth. (To round to the nearest eighth, you multiply by eight, round, then divide by eight.)
(Comment from old site:)
I’m glad I’m not the one
I’m glad I’m not the one doing the finances!
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