I decided to take the time to go back and look up the details on our 10-1 ARM. Turns out I was wrong about a few key points, like how much the interest rate could adjust initially and each year thereafter.

For my future reference in plugging into loan calculators:

inital loan amount: $414,000

initial rate: 5.125%

initial payment: $2254.18

term: 360 months

first payment due: 10/1/03

first rate change: 10/1/13

maturity: 9/1/33

index: one-year treasury

margin: 2.75% added to index

adjustment period: 1 year

max rate at first change: 10.125%

min rate at first change: index + 2.75

max change thereafter: 2%

max rate cap: 10.125%

So it's extremely imporatant that I watch the interest rates as we get close to 2013 -- I had no idea it could jump to 10.125 at the first adjustment, and I really thought the max change was 1% per year, not 2%. Still, until we make a decision about whether to stay in this house or move to a better school district, I don't think we should refinance.

# Our loan details weren't what I thought

November 29th, 2008 at 04:02 pm

November 29th, 2008 at 04:18 pm 1227975510

Good job digging in to the paperwork to make sure you undertood the details!

It sounds like you are really on top of things so you don't need me telling you this, but in another couple of years really start to pay attention to how long it is taking houses in your area to sell. And then think about the "worst case scenario" ... such as if it took your house 2 or 3 times as long to sell as the average.

November 29th, 2008 at 05:20 pm 1227979253