My ARM loan is ready to adjust what should I do? - Over the course of the next few years there are going to be a lot of consumers who obtained ARM, adjustable rate mortgages, that are going to be getting ready to make their first adjustment. Also, there are many people who are not sure what they should do at this point. Should they refinance? Should they wait? Is refinancing going to be worth it. Refinancing should definitely be considered, especially due to the fact of the uncertainty of the US economy. The worst thing you could do at this point is hold off and then watch rates skyrocket along with your adjustable rate mortgage that you waited to refinance. Consult a mortgage professional today at 414-303-1215 or msearing@mayfairmortgage.com and explore your options before it is too late.

Many people who took out Home Equity Lines Of Credit 2 years ago have seen their rates rise dramatically. Home Equity Lines of Credit (HELOCs) are directly tied to the prime rate. In 2004 the prime rate was as low as 6%, thus so was the rates on HELOCs. In 2006 that rate had gone up to 8.25%. Many have seen their monthly payments increase substantially because of this. Homeowners are refinancing out of their HELOCs and combining it with their first mortgage into a more stable fixed rate.

Many customers choose to take an ARM because their credit was poor, or they didn't have any money for a down payment, or some other reason that prevented them from getting the best fixed rates. If you are one of these people and you have been working on your credit for the past two or three years, and your home has been gaining equity you have many more options available to you now.

You should definitely contact a mortgage professional within two to three months prior to the time your ARM is scheduled to adjust.

If your Adjustable Rate Mortgage loan is entering its adjustable period, you've probably received notice from your current lender that your payment is scheduled to increase in a coming pay period, often by 25% or more. It's important for you as a homeowner to take the necessary steps to lock in a low payment today, and avoid paying egregious interest rates when your loan adjusts. Contact a mortgage professional at 414-303-1215 for a free, no obligation estimate of the options you may have available.

ARM Rate Increase - The initial rate for an ARM mortgage is fixed for an introductory period ranging from 1 month to 10 or more years. Most Adjustable Rate Mortgages have a fixed, or "teaser" period of 2 or 3 years (2/28 or 3/27 are the industry terms for these ARM loans).

After the ARMs introductory period expires, the rate on your ARM may increase. If you took out your ARM mortgage in the past 5 years, you can safely assume that your new adjustable rate will increase dramatically immediately at the end of the 2 or 3 year fixed period. On some ARM loans, the increase to the new adjustable rate may cause your payment to as much as double.

If your Adjustable Rate ARM mortgage is about to reach the end of its fixed period, you may be able to avoid paying substantially higher mortgage payments by refinancing your Adjustable Rate Mortgage and converting to a Fixed Rate Mortgage. A Fixed Rate Refinance is a very popular option, and if you have equity in your home you may be able to refinance into a secure fixed rate with little to no out of pocket cost.

Just how much your Adjustable Rate ARM mortgage's rate and payment may increase at the end of the introductory fixed period depends largely on the "caps" which were stipulated in your loan documents. These may or may not match the figures disclosed in the Truth in Lending disclosures you received in connection with your mortgage.

Many ARM Adjustable Rate Mortgage home loans written over the past 5 year were written with 6/2/6 caps, meaning that at the first adjustment period (the very next month after the fixed rate introductory period on your loan ends), your ARM's adjustable mortgage rate may increase by as much as 6%. For many borrowers who took out ARM loans with low 5% and 6% "teaser" interest rates, a 6% adjustment could mean a doubling of their mortgage payment, or more.

ARM loans can be a strong investment tool to help provide you with a low interest rate and a low payment for a specific period of time. If your ARM is about to make its first adjustment you have a few choices. Choice 1, you can choose to do nothing and you will most likely see an increase of anywhere from 1-2 percent in your interest rate and your payment will increase accordingly. This is most likely going to be the worst option. Choice 2, you can look into refinancing and you can obtain a fixed rate mortgage so that you don't have to worry about the interest rate ever adjusting on you again. Choice 3, you could look into refinancing you mortgage into another adjustable rate mortgage so that you can keep your interest rate and your mortgage payment relatively low and under most circumstances, lower than a fixed rate mortgage. Therefore, discuss your financial goals and your future plans with your mortgage professional thoroughly so that together you can make sure that you obtain the best mortgage for your specific situation.

The best thing for you to do as a home owner with an ARM is to talk to a mortgage professional about your situation. A mortgage professional will be able to guide you in the right direction and offer solutions for your situation. If you would like to speak with me directly about your ARM mortgage please call me at 414-303-1215.

Should I refinance my ARM to a fixed rate - There are benefits and negatives to both a fixed rate and an ARM mortgage, but for the borrower who is thinking about refinancing their ARM into a fixed rate, there are many things to consider. By Refinancing your ARM to a fixed-rate mortgage you will avoid the payment increase when your ARM interest rate begins to adjust. You will also lock into a more stable payment for the term of your mortgage.

Rates are rising rapidly for short term, adjustable rate mortgages. If your loan is adjusting, the payments could increase by up to 50% or more. You may be able to substantially reduce your adjusted payment by locking in a fixed rate today. Some Fixed Rate mortgages even have payment options as low as 1.95%

If you are currently in a sub-prime 2/28 ARM you may want to consider refinancing to a fixed rate. If property values are starting to drop in your area It is even more critical that you refinance out of your ARM in the near future.

Many people take adjustable rate mortgages because credit challenges prevented them from having a low fixed rate. If you have made all of your mortgage payments on time and your credit score has increased you may be able to refinance into a Fixed Rate Mortgage without increasing your payments.

If affordability is a determining factor in deciding your mortgage structure, ask your loan officer or mortgage broker if structuring your loan as an Adjustable Rate will give you more flexibility.

When deciding to refinance your adjustable rate mortgage (ARM) into a fixed rate mortgage, you first need to decide how long you think you will be in your home. If you are in the second year of a 5 year ARM, and only see yourself in the house for another 2-3 years, then you may want to wait until it is absolutely necessary to make the change. Your mortgage broker can advise you as to what the market may do, but they will not know what is in store for years to come. Concurrently they will also not know the number of years you will be in the home, along with any changes in your life that may require you to move.

If you are in a situation in which you MUST refinance, pay close attention to what is going on in the market. Make sure you are dealing with a savvy and honest loan officer or Mortgage Broker. Sometimes the yield curve becomes inverted, and you can actually refinance into a 30 year fixed mortgage, at a lower or equal rate than a 3 or 5 year ARM!

You need to find what your break even point is for your current loan. Have you already broken even? If not how much more will it cost you to continue in your current loan? Have an honest discussion with a broker to decide what the best course of action is.

In an economic climate where short term rates and long term rates are about the same, it may be better to refinance adjustable rate mortgages into fixed rate loans. Home buyers are willing to share the risks of an adjustable rate mortgage when the adjustable rate is significantly lower than fixed rate mortgages. If such advantage no longer exists, fixed rate mortgage is often a preferred choice.