I'm about to lose it. What should I do? Please help!!

[STEPH1079]

I copied this directly from our mortgage note. I have an idea of what it means, but I'm not certain on some parts:


The note holder will calculate my new interest rate by adding six and one eight percentage points (6.125%) to the Current Index. The Note Holder will then round the result of this addition to the nearest one-eighth of one percentage point (0.125%)
This rounded amount will be my new interest rate until the next change date.
The interest rate that I am required to pay at the first change date will not be greater than 11.75 or less than 8.75%. Thereafter, my interest rate will never be increased or decreased on any single change date by more than one percentage point from the rate of interest I have been paying for the preceding six months. My interest rate will never be greater than 14.75% and will not be less than 8.75%

[SinkingFast]

According to Bloomberg.com, the 3 month Libor was 5.33% today.

If that 5.33 were the base for your mortgage, and your adjustment were being fixed based on today's rate, you'd add 5.33 to 6.125, and you'd get 11.455. Rounding to the nearest 0.125%, your interest rate would be 11.5%.

Since your note says the interest rate is rounded to the nearest 1/8th%, they could actually round down and not up. But in this particular example, the interest rate goes up. To get 11.375% interest, your result would have to be less than 11.4375%.

When we are in a downward trend, your interest rate could drop 1% every 6 months, but will never go below 8% interest.

When rates rise, your interest rate could go up 1% every 6 months, but you will never pay more than 14.75% interest.

Adjustables can be a bit of a Yo-Yo. The first half of a year, the rates could go down so when your note adjusts, your interest goes down. Later in the year, the rates could go up so when your note adjusts, your interest goes up as well. You just kinda have to keep an eye on the market and what it's doing to know what to expect.

Also, there's probably some verbage in your note about the date they pick to set your rate. When we had an adjustable rate mortgage, I never actually got the same number the Lender did. I'd watch the paper for the Treasury note rates, or Prime, or whatever the basis was. I'd be close to what the Lender said, but never was quite exactly on the mark.