LIBOR stands for London Interbank Offered Rate.  It is the rate of interest at which banks borrow money from other banks in the London Interbank Market.  LIBOR reflects the world economic condition, and helps international investors to match their cost of lending to their cost of funds.

Why would I want a LIBOR Mortgage

LIBOR ARM mortgages gives you aggressive initial rates that are usually much lower than other ARMs.  You are generally protected from great fluctuations in interest rates with periodic and lifetime caps.  Your caps will vary according to your situation, but many lenders offer Lifetime caps of 5% or 6%.

What can I use a LIBOR Mortgage for and what are my options for a LIBOR Mortgage

You can use a LIBOR Mortgage as an alternative to a traditional Adjustable Rate Mortgage.  Your options for a LIBOR Mortgage include 5/1 Year LIBOR3/1 Year LIBOR1 Year LIBOR6 Month LIBOR, and 1 Month LIBOR.

Why should I get a LIBOR Mortgage

An additional benefit that you would receive from a LIBOR mortgage that we have not yet discussed is its amortization benefits.  LIBORs very rarely have Negative Amortization.  Amortization means that your monthly payments are large enough to pay your interest, plus some of the principal on your loan.  Negative Amortization means that your monthly payments are not covering all of your interest, let alone the principal.  This simply increases the money you owe.

How can I get a LIBOR mortgage

You can get a LIBOR mortgage by clicking here right now.

How can my FICO/Credit Score effect my mortgage rate

Your FICO and Credit Score are a very important factor in determining your LIBOR Mortgage rate. If your score is between 720-850, you have very little to worry about; you are in the A-paper range.  Many lenders will not work with borrowers with a score below 660, and 620 is the cutoff between A-Paper and Sub-Prime or Non-Prime lending.

A few more tidbits about LIBOR

  • Your lender can use the LIBOR rate as posted by Fannie Mae or the Wall Street Journal, but he/she must specify which one in the contract.
  •  The Wall Street Journal LIBOR is posted by the British Bankers Association (BBA).  The Wall Street Journal publishes the previous day’s LIBOR rate.  The BBA website posts LIBOR rates with a rolling one week delay.


This site is not a broker and does not collect or solicit mortgage applications. Content is for informational or comparison purposes only. Services are not available in New York. Products and services may not be available in all other states.

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