Mortgage Price

Mortgage Price

The interest rate or rates and upfront fees paid to the lender and mortgage broker.

Some upfront charges are expressed as a percent of the loan, and some are expressed in dollars. The price includes the total of each type.

On a fixed-rate mortgage (FRM), one interest rate is preset for the life of the loan. On an adjustable rate mortgage (ARM), the rate is preset for an initial period, ranging from one month to 10 years, and then can change. For ARM shoppers who are uncertain about how long they will be in their house, the price includes ARM features that affect the ARM rate after the initial rate period ends. These include the margin, maximum rate, rate adjustment period, and rate adjustment caps.

The margin is the amount that is added to the index used by the ARM in determining the rate after the initial rate period ends. In a stable interest rate environment, the ARM rate will become the index plus margin, called the “fully indexed rate.” Both the index and the margin are specified in the ARM contract.

The maximum rate is the highest rate permitted by the ARM contract. It tells shoppers how high the ARM rate can go in a rising rate environment.

The rate adjustment period and rate adjustment caps indicate how often the rate is changed and the maximum amount of any change. Hence, they indicate whether any rate increases at the end of the initial rate period will be abrupt or gradual.

References in periodicals archive ?
A mortgage price war has broken out in recent months, with many lenders offering their lowest ever rates, although some lenders have started to tweak the rates they are offering upwards in recent weeks.
A mortgage price war had broken out between lenders, with many slashing the rates on their deals to the lowest they have ever offered.
A mortgage price war in recent months has led to many mortgage lenders offering their cheapest-ever rates.
A mortgage price war which broke out between lenders last autumn has continued to intensify this year, with an avalanche of lenders chopping their rates to record lows.
Global Banking News-January 2, 2015--UK mortgage price war intensifies
A mortgage price war broke out after the launch of Funding for Lending, which has given lenders access to cheap finance to help borrowers.
Access to cheap finance has also helped to prompt a mortgage price war, with lenders slashing their rates to some of their lowest ever levels.
AIB said while it is keeping its lending rates under constant review, based on current funding costs it does not anticipate any further variable mortgage price increases this year.
The scheme has prompted a mortgage price war with several lenders slashing their rates, although much of the strongest competition so far has been to attract borrowers with bigger deposits.
A MORTGAGE price war loomed last night after one of Britain's biggest lenders slashed interest costs on a two-year fixed-rate deal to a record 1.
A mortgage price war slashing the costs of home loans has been welcomed by politicians.
ABBEY National yesterday claimed their increased profits prove they were right to stay out of the mortgage price war.

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