- 1). Find the package of paperwork you received when you closed your last mortgage. Inside, you'll be looking for a couple documents. These include a mortgage note, an adjustable rate mortgage note, and an adjustable rate rider. You'll need all three.
- 2). Look for the following four terms: margin, index, ceiling, and floor. The margin is a fixed rate spelled out in the mortgage note. The index is a fluctuating rate based on one of the main market indexes. Common indexes are the Prime Rate, the LIBOR (London InterBank Offered Rate), and the six-month T-Bill.
- 3). Determine your index. Get a current copy of the Wall Street Journal or go online to find out the current value of your index. Indexes are reviewed and can be adjusted monthly. Write down the value of your index.
- 4). Add the value of the index to your margin. Compare this number to both the ceiling and the floor. These two rates represent the highest and lowest, respectively, that your mortgage rate can be. So long as the number resulting from the addition of the index and the margin is both higher than the floor and lower than the ceiling, this is your new mortgage rate.
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