Thats a complaint Loan Officers are hearing a lot lately. Youre not alone. Different estimates are that between 500 billion and 1 trillion dollars of adjustable rate mortgages (ARMs) are set to adjust by the end of next year.
Some good news - your ARM, as opposed to a fixed rate mortgage, has almost definitely saved you thousands of dollars in interest over the last few years. Congratulations!
In the current interest rate environment, 30-year fixed rates are just as low as short term ARM rates, and much lower than rates of hybrid mortgages. Hybrid mortgages with a fixed rate period of 2 or 3 years in the beginning then subsequently followed by a 27 or 28 years with adjustable rates often have low rates during the fixed period. However, when the fixed period ends and the adjustable rate period starts, homeowners are in for a much higher rate and bigger monthly payment. Refinance out of such hybrid mortgage before the adjustable rate kicks in is prudent.
About the only to avoid the "PAYMENT SHOCK" is to refinance the adjusting loan into a fixed rate mortgage (FRM), at least until the rising trend of Adjustable Rates has leveled off.
The new FHASecure program was created especially to help borrowers whose adjustable rate mortgage payment has gone up and they have fallen behind in payments. If you can establish that the reason for your late payments was the rate increase on your mortgage and you had made the previous 6 months payments on time, an FHA mortgage could be the answer to your problem.
Adjustable Rate Mortgages which are approaching the end of their fixed rate period will continue to adjust upwards so long as market interest rates continue on their upward trend. Many borrowers with adjustable rate mortgages who don't like the idea of their payments going up are seeking the security of refinancing into a fixed rate mortgage. Don't wait until you miss a payment to refinance your adjustable rate ARM mortgage. Lock in a low fixed rate today.
Some areas have seen property values plummeted. Homeowners in those areas and had used 100% financing to purchase their homes may find it difficult to refinance their mortgage. If these borrowers have hybrid mortgages that are adjusting and cannot afford the increase in payments, they need to seek help from their current banks and mortgage professionals before they become delinquent, which turns a simple refinance into a foreclosure bailout and will render the process much more difficult, if not outright impossible.
Another feature of the adjustable rate loan should be noted: commonly, adjustable rate loans are assumable by a creditworthy buyer. In other words, having an assumable loan might
If your mortgage rate is adjusting too much then it may be time to look into refinancing your mortgage loan. You can explore the options of refinancing your mortgage into a fixed rate mortgage to stop the loan from ever adjusting over the life of the loan or you can even look into refinancing your mortgage loan into another adjustable rate mortgage. Refinancing your mortgage into another adjustable rate mortgage will provide you with the lowest rate for your situation again and a rate that is fixed for a short term. Either option can provide you with the financing you need and get you away from the home loan that is currently adjusting by leaps and bounds.
For some people, interest rates are going up 3-4% once their adjustable rate mortgage adjusts. This is resulting in a payment increase of anywhere between $100 and $500 a month, possibly more depending on the size of your loan. A good, experienced loan officer can help you sort through your options.
