What mortgages are based on the London InterBank Offered Rate (LIBOR)?


The London InterBank Offered Rate (LIBOR) is a common ARM index. That is, there are adjustable rate mortgages based on the 1-month, 3-month, 6-month and 1-year LIBOR. The main feature that distinguishes mortgages, based on some of the LIBOR indexes, is that payment options leading to negative amortization of the loan principal is unlikely to be offered with LIBOR ARMs.

The London InterBank Offered Rate (LIBOR) indexed home loans are some of the best mortgage products developed for homebuyers. Together with London InterBank Offered Rate (LIBOR) based mortgages, lenders have designed Constant Maturity Treasury (CMT) based mortgages products also very popular among consumers.

Popular London InterBank Offered Rate (LIBOR) Based Mortgage Features

Those mortgages will usually be available for purchasing single unit primary and secondary homes, as well as condos and PUDs. Although LIBOR home loans might be available for manufactured homes and co-ops, some lenders will have restrictions on those, or won't have them at all.

3/1, 5/1, 7/1, 10/1 London InterBank Offered Rate (LIBOR) home loans are often available as permanent buydown mortgages, or mortgages for newly constructed homes.

Currently, LIBOR-based prime loan single financing is likely to have 95% LTV for home purchase and no cash-out refinance. Or, it could allow cash-out for up to 80% LTV.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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