Question:

What is a LIBOR ARM mortgage?

Answer:

LIBOR stands for London InterBank Offerred Rate. A LIBOR ARM mortgage is an adjustable rate home loan tied to either 1-, 3-, 6-, or 12-month LIBOR index.

LIBOR ARM Mortgage Features

  • Those ARMs do not have so many payment options, nor are possible to result in negative amortization.
  • LIBOR ARMs are more volatile than ARMs tied to MTA, CODI or COFI ARM indexes
  • LIBOR ARM mortgage loans are made very attractive to perfect credit borrowers - the margin is very low compared to other ARM margins. However, borrowers with real bad credit should avoid LIBOR ARM mortgages.
  • LIBOR ARM rates usually adjust once or twice a year after an initial rate for 6 months to ten years.

Some LIBOR mortgages can have a very nice lifetime rate cap such as 5 or 6%; others can have a 10% or even higher lifetime cap.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
Was this Mortgage QnA helpful?
Not at all
  • Currently 2.9/5 Stars
  • 1
  • 2
  • 3
  • 4
  • 5
Definitely
Add to this Answer

Mortgage QnA is not a common forum. We have special rules:

  • Post no questions here. To ask a question, click the Ask a Question link
  • We will not publish answers that include any form of advertising
  • Add your answer only if it will contrubute to the quality of this Mortgage QnA and help future readers
If you have trouble reading the code, click on the code itself to generate a new random code. Verification Code Above:
Bookmark and share this QnA: