Concerned about the rising interest rate on your adjustable rate mortgage?
The Reason for Concern
Many borrowers who purchased homes in the last 2-5 years have taken out loans with short term adjustable rate mortgage terms due to extremely enticing low start rates and payments. Some are even unaware of the details of the loan program they have. Along with this future adjustment and other debts some borrowers may find themselves unable to afford the higher payments when the ARM's are set to adjust. The loans will adjust by as much as 2%. These homeowners will be facing imminent payment shock!
The Solution
To combat the problem lending institutions are rolling out expanded lending programs to allow borrowers to qualify for low rate refinances with fixed mortgage terms even if they have less than perfect credit or have fallen behind on a payment or two. If
you currently are in an adjustable rate mortgage you should develop an exit strategy. An exit strategy is a well thought plan on how you're going to leave your current mortgage Having a plan does not mean waiting until you receive a notice from your mortgage company that your mortgage payment is hiking because your fixed period on your ARM is over. You need an exit strategy because once the fixed period is over and your mortgage adjusts, chances are that your new mortgage payment will not be affordable.
Locate your current loan documents and review the note (deed of trust) to determine the adjustment caps such as 2/2/6 or 5/2/6 If your current note rate is 6% based on these caps your new rate could jump to as much as 6% + 2 = 8% or 6%+5= 11% on a ARM reset.
Locate your current loan documents and review the note (deed of trust) to determine the adjustment caps such as 2/2/6 or 5/2/6 If your current note rate is 6% based on these caps your new rate could jump to as much as 6% + 2 = 8% or 6%+5= 11% on a ARM reset
Review the note to examine if you have a prepayment penalty and check to see when it expires. You may want to wait until it expires to refinance.
Visit https://www.annualcreditreport.com/ and review your credit report. You don't need to sign up for all the credit bureaus extra stuff. In fact, I recommend that you just use one of the bureaus to pull your information for review and select another bureau in 4 months and the last bureau in 8-9 months so that you are constantly reviewing your credit information
Contact Trinity 1 Financial Group to calculate your increased payment to determine what it will be after adjustment and discuss you other fixed rate loan options at 1-866-684-7868
