Mortgage Rates to go up by week's end? . .

[ashedfc]

My variable rate is prime -0.5%. Prime has gone up .25% twice since I got my mortgage and each time it did my monthly payment went up about $40.

YES, its true.. its actually a part of the fine prints in your mortgage..

When you take a variable rate mortgage, some lenders have an option (or allow you to choose from)...
1. Increase/Decreasing the monthly payment with every increase/decrease in interest rates. or
2. Keep the same monthly payment & change the principal amount paid every month with every increase or decrease in interest rates.. with this though there is a threshold, that once the interest portion of the monthly payment reaches a certain level (& principal portion becomes negligible), they increase the monthly payment..

Yours is the first option, where its increasing $40 with an increase in interest rate; whereas the previous post has the other option in her/his mortgage..