What is the ‘FHLB Fixed advance rate’??? - Posted by IB (NJ)

Posted by IB (NJ) on September 22, 2004 at 17:55:21:

I’m looking at a mortgage commitment that reads in part:

“The initial rate will be 7% fixed for the first five years and then adjust(ed) for the following five years to the FHLB fixed advance rate plus a margin of 350 basis points. Thoughout the term of the loan there will be a floor rate of 7% or whatever the initial rate is.”

It sounds like to me that the rate will start at 7% (thus the ‘floor’ terminology) and go from there. But I’m unclear as to what the rate will be after 5 years. What exactly is the FHLB rate and where is it today? I see that I will have to add 3.5% to that rate (whatever it is).

BTW, this was a mortage commitment presented to me for a 12 unit apartment building I’m buying. I rejected the loan due to some other crap the bank wanted me to agree to. Thanks in advance for all your help.