I noticed the letter right away. It was the one I had been anticipating for the last 6 months. I was curious about its contents and like most, feared the worst. As I opened it I was getting ready to grab my ankles and get upset. I figured that my past actions would be meaningless and that I was going to get screwed no matter what.
The letter was from my mortgage company. My 5 year ARM was due to be adjusted on May 1 and this was the official notice of what my new rate would be. When I refinanced my mortgage years I did my research. I figured that there was a slight chance I would not be in the house anymore. There was chance I wouldn’t be in the state, let alone the city. But I also took some advice that I heard on the television. He said to go with a 5 year ARM because mortgage rates go in 5 year cycles. When the time comes for an adjustment, you won’t get hit hard or the rates for a 30 year may be favorable for you to refinance again. Being a stock guy it made sense. I checked some charts on government bonds and the data correlated well.
I had been checking mortgage rates for the last couple of weeks. I tried to find the card of the former co-worker I had worked with years ago when I had refinanced. The horror stories of ARM adjustments had been news over the last year. Even though I had always made my payments and had great credit, I expected to see a bump. Similar rates for me were at least 75 bps higher. I figured that paying extra on my mortgage (I am one of the most debt averse people you will meet and no the tax incentive on the mortgage isn’t that great to not pay off early) would mean they lost money on me since my balance was coming down.
I was surprised to read that my rate actually went DOWN. That can’t be right. They lowered my mortgage rate by a quarter? You mean to tell me they system worked?
I feel like a bit of a genius right now. A little research and the right decision paid off. Now I need to decide whether to take a chance and take some of the money saved and plow it into bank stocks. My mortgage could be paid off in a couple years if my research is right again.