I am shopping around for a mortgage but I dont understand what happens when the initial 2 year fixed rate term expires. Can you move the loan to another bank and get another fixed rate ?
4 Comment(s)
Once your fixed rate term expires on an adjustable rate mortgage, it is more than likely that your rate will adjust higher depending on what the previous rate was but keep in mind that the current mortgage rate are still at historic low so if i may suggest Provided you have a good to excellent credit score, you can look into refinancing your mortgage into a longer term rate if you intend to stay in the place for a while.
When most people call something a fixed rate mortgage they mean a fixed rate fully amortized mortgage.
What you must have is a mortgage that the rate was fixed for a period of time and then it either balloons (you have to pay off the balance with cash or by getting a new loan somewhere) or the interest rates adjusts.
Either way you should find out what your loan will do. You should not get a loan that you don’t understand. I would stick with fixed rate fully amortized loans- and I would stick with local loan officers that I can speak face to face with. A lot of very smart people have been conned by mortgage loan officers they only met over the internet. Even if it is a large well known company I would only deal with a local loan officer.
Fixed means fixed….it does not “expire”. You are referring to an adjustable rate mortgage, with a fixed term at the beginning. You can move the loan to another back, assuming that your loan is NOT underwater. If you cannot get it refinanced, you are at the mercy of prevailing mortgage rates until you can.
It sounds like you have a hybrid adjustable-rate mortgage, meaning it is fixed for the first “X” amount of years, and then becomes adjustable. You’ll have to look at your loan paperwork to see what the “margin” is and what the “index” the loan is tied to. Once you know these two things, you combine them and you’ll know what the new rate will be.
The loan doesn’t just end, it just becomes variable, meaning it will change either every six months or every year, based on that index I mentioned.
Once your fixed rate term expires on an adjustable rate mortgage, it is more than likely that your rate will adjust higher depending on what the previous rate was but keep in mind that the current mortgage rate are still at historic low so if i may suggest Provided you have a good to excellent credit score, you can look into refinancing your mortgage into a longer term rate if you intend to stay in the place for a while.
lionel a | Aug 1, 2009 | Reply
When most people call something a fixed rate mortgage they mean a fixed rate fully amortized mortgage.
What you must have is a mortgage that the rate was fixed for a period of time and then it either balloons (you have to pay off the balance with cash or by getting a new loan somewhere) or the interest rates adjusts.
Either way you should find out what your loan will do. You should not get a loan that you don’t understand. I would stick with fixed rate fully amortized loans- and I would stick with local loan officers that I can speak face to face with. A lot of very smart people have been conned by mortgage loan officers they only met over the internet. Even if it is a large well known company I would only deal with a local loan officer.
glenn | Aug 2, 2009 | Reply
Fixed means fixed….it does not “expire”. You are referring to an adjustable rate mortgage, with a fixed term at the beginning. You can move the loan to another back, assuming that your loan is NOT underwater. If you cannot get it refinanced, you are at the mercy of prevailing mortgage rates until you can.
Ryan M | Aug 2, 2009 | Reply
It sounds like you have a hybrid adjustable-rate mortgage, meaning it is fixed for the first “X” amount of years, and then becomes adjustable. You’ll have to look at your loan paperwork to see what the “margin” is and what the “index” the loan is tied to. Once you know these two things, you combine them and you’ll know what the new rate will be.
The loan doesn’t just end, it just becomes variable, meaning it will change either every six months or every year, based on that index I mentioned.
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rockcolin | Aug 3, 2009 | Reply