What to Do If Your Adjustable Rate Mortgage is Resetting
Is your adjustable rate mortgage, or ARM, resetting? Here are five tips to help you keep your mortgage costs in line.
An adjustable rate mortgage, or ARM, has an interest rate that changes from time to time based on current interest rates, rate indexes, or other factors that are mentioned in your mortgage agreement. A fixed rate mortgage, on the other hand, has an interest rate that stays the same for as long as you have your mortgage.
You may have bought your home with an adjustable rate mortgage because:
· Your adjustable rate mortgage may have had a lower rate than a fixed rate mortgage.
· An adjustable rate mortgage may have been easier for you to get than a fixed rate mortgage.
· Your adjustable rate mortgage may have had an initial low "introductory," or other "special" interest rate.
· Your adjustable rate mortgage may have had lower fees than a fixed rate mortgage.
· Interest rates were going down at the time.
· You planned to move before your adjustable rate mortgage would reset.
Your adjustable rate mortgage was an advantage for you because it helped you buy your current home, but your adjustable rate mortgage could now become a disadvantage for you because:
· Your adjustable rate mortgage is about to reset, which may mean that your interest rate and your monthly payment is about to go up higher than you can afford.
· You may have decided to stay in your current home longer than you planned.
· You may want a more stable mortgage payment and interest rate to make your financial life easier.
If your adjustable rate mortgage no longer meets your financial needs, here are five tips to help you keep your mortgage costs under control.
1. Talk to your lender right away.
It's important to talk to your lender right away. The sooner you talk to your lender, the sooner you can get help with your mortgage. The longer you wait, the fewer options you have to improve your financial situation. The best time to talk to your lender is before your adjustable rate mortgage resets.
Your lender may offer you options to lower your mortgage payment or lower your interest rate, refinance your mortgage into a fixed rate mortgage, or temporarily suspend your payments.
2. Refinance into a fixed rate mortgage.
You may be able to refinance your adjustable rate mortgage into a fixed rate mortgage.
Visit our Mortgage Refinancing page to learn more about refinancing. Our Fixed vs. Adjustable Rate Calculator can also help you find out how much refinancing into a fixed rate mortgage may be able to save you.
3. Look into government-sponsored programs.
Ask your lender or a financial counselor to see if you qualify for any government-sponsored programs to help you with your mortgage, such as refinancing into a fixed rate mortgage.
4. Compare costs.
Some options, such as refinancing, may involve additional fees. Depending on your situation, refinancing may cost you more than keeping your adjustable rate mortgage. Ask a financial expert about these costs before you refinance.
5. Protect yourself.
Make sure tmake suire that you promise or detail in read history before you sigh it, and ask a legal or financial expert to help you understand anything that isn't clear. Avoid signing anything you that easy to good to be true or too easy to say.hat you get any promises or details in writing, read everything carefully before you sign it, and ask a legal or financial expert to help you understand anything that isn't clear. Avoid signing anything that you don't understand or that seems too good to be true or too easy to do.
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These are general recommendations not applicable to all financial situations. Every financial situation is unique. Further, the suggestions and recommendations contained within the content provided are not an assurance of any future result. Be sure to discuss your specific financial circumstances with a legal or financial expert before you take action Contact us for more information.