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Answers (7)
- Rick Payne Home Buyers Specialist, "BUYER SPECIALIST !"
- Contributions:81
I would contact the bank ASAP and discuss your options. If you want to keep your home the best option is to start the discussion about a loan modification. Most banks are open to this option if there is need.
Your specific ARM will have certain new loan criteria that will go into effect at the end of the ARM term.
I would recommend you talk with the lender prior to the new loan terms going into effect.
Good Luck,
If you need anything else please contact me.
Rick Payne
Keller Williams Realty
Your specific ARM will have certain new loan criteria that will go into effect at the end of the ARM term.
I would recommend you talk with the lender prior to the new loan terms going into effect.
Good Luck,
If you need anything else please contact me.
Rick Payne
Keller Williams Realty
- Jonathan Rainer, "RainerRR"
- Contributions:74
I suggest getting quotes on doing a fixed rate refinance. Even if your rate adjusts down, you could still see much higher rates in the future...in just 2 or 3 years, you might be paying a lot more than today. Your home may have not appreciated any in that time, either.
Since your mortgage balance is more than the home is worth, you may have to fork over a good bit of change to make the refinance happen...at least $35,000. Since some people have that cash available, I'm throwing it out there. Rates are really great right now. If your ARM adjust UP in a couple of years, then it's because interest rates are rising...meaning you won't be able to lock in a great fixed rate like now.
Think of it this way, too: if you had to sell today, you would have to come to the closing table with cash to buy yourself out of the current mortgage. So, with this refinance, you're just buying yourself out of your current adjustable rate loan and into a fixed rate. Remember that in the '70's rates jumped to over 15%. It might happen again.
Another option: if your rate adjusts down, your payment will drop. But, you can continue to pay what you pay today. That will pay down your balance even further, and you can more quickly balance the difference between your loan balance and the home's value.
And a third option: Rates have been predicted to rise time and time again. If inflation sets in, then it will happen eventually. When it does, then your rate (and your payment will rise). If the housing market is still in a slump at that time, you could probably talk your lender into another rate lock. I was able to do this with my lender on my own ARM...they locked me in to another 5 year fixed rate!
Finally, verify what index your ARM is tied to, and whether it adds points to the index (it may add 2 percentage points to the index's rate). See your original mortgage documents for this, or give them a call. Find the index's current value to see if your rate goes up or down so you know what to expect. Then, set yourself a reminder to check the index every couple of months. You'll be surprised how easily one of those indexes can rise a percentage point or two, even if new mortgage rates (what we all hear about in news stories) haven't risen yet.
Best of luck! :)
Since your mortgage balance is more than the home is worth, you may have to fork over a good bit of change to make the refinance happen...at least $35,000. Since some people have that cash available, I'm throwing it out there. Rates are really great right now. If your ARM adjust UP in a couple of years, then it's because interest rates are rising...meaning you won't be able to lock in a great fixed rate like now.
Think of it this way, too: if you had to sell today, you would have to come to the closing table with cash to buy yourself out of the current mortgage. So, with this refinance, you're just buying yourself out of your current adjustable rate loan and into a fixed rate. Remember that in the '70's rates jumped to over 15%. It might happen again.
Another option: if your rate adjusts down, your payment will drop. But, you can continue to pay what you pay today. That will pay down your balance even further, and you can more quickly balance the difference between your loan balance and the home's value.
And a third option: Rates have been predicted to rise time and time again. If inflation sets in, then it will happen eventually. When it does, then your rate (and your payment will rise). If the housing market is still in a slump at that time, you could probably talk your lender into another rate lock. I was able to do this with my lender on my own ARM...they locked me in to another 5 year fixed rate!
Finally, verify what index your ARM is tied to, and whether it adds points to the index (it may add 2 percentage points to the index's rate). See your original mortgage documents for this, or give them a call. Find the index's current value to see if your rate goes up or down so you know what to expect. Then, set yourself a reminder to check the index every couple of months. You'll be surprised how easily one of those indexes can rise a percentage point or two, even if new mortgage rates (what we all hear about in news stories) haven't risen yet.
Best of luck! :)
- Chris Richter, "ChicagoMortgageLoan"
- Contributions:101
If you do nothing, your loan will adjust in one way for sure, possibly in a second.
The first will be a change in rate. That is likely going to go lower v. 2005(ish) when you started the loan.
The second is that you may have a loan with either a 5 year interest only term or it could be longer, say 10 years. Whenever that I/O period ends, the second potential change would be that your loan moves to a full amortization. For example, you might have been at 4.75% I/O, now you might switch to something in the low 3's, but it would be principal and interest = higher payment due to the principal reduction.
Have you checked to see if your loan is owned by Fannie or Freddie? That would expand your refinance options. Try here
http://makinghomeaffordable.gov/loan_lookup.html
The first will be a change in rate. That is likely going to go lower v. 2005(ish) when you started the loan.
The second is that you may have a loan with either a 5 year interest only term or it could be longer, say 10 years. Whenever that I/O period ends, the second potential change would be that your loan moves to a full amortization. For example, you might have been at 4.75% I/O, now you might switch to something in the low 3's, but it would be principal and interest = higher payment due to the principal reduction.
Have you checked to see if your loan is owned by Fannie or Freddie? That would expand your refinance options. Try here
http://makinghomeaffordable.gov/loan_lookup.html
- grc336
- Contributions:2
Thank you everyone. Very much appreciated.
- Steve Roake, "Steve Roake"
- Contributions:285
Most likely it will reset to a new interest rate every year. This may be beneficial this year with low interest rates, but as interest rates climb it will cost you more. Loan modification to a 30 year fixed may be an option. Contact your lender to find out more. Refinance is probably not an option if you owe more than the property's value.
- Kristin McKeeth, "thepremiergroup"
- Contributions:37
I agree with Tim. Many adjustables are benefiting sellers right now. If you are wanting to stay in the home, there are many solutions but the first and main thing you have to do is communicate with your lender and be honest about what is happening in your life, and dont wait until its too late to take any action (if any is necessary) and know your options. So many people bury their head in the sand hoping the situation will go away then are limited with what they are able to do because they have waited so long.
Good Luck!
Good Luck!
- Tim Moore, "Kitty_Hawk_NC"
- Contributions:151
I would call the lender and ask what will happen when the 5 yrs is up. My guess is it will convert to a new interest rate that might actually be lower than what it is now since rates have dropped through the floor in the past 5 years. You can always refinance but I would start calling your lender to find out what they can tell you.
Owe more than home is worth; ARM about to EXPIRE
Any thoughts and advice are greatly appreciated.
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