If your ARM rate adjusted recently, you are one of the millions of Americans who has a mortgage payment that just increased. Fortunately, in most cases there are loan programs you can qualify for that offer the stability of a fixed monthly payment. Many of the following programs or products can help you on your way to getting rid of your current adjustable rate loan program.One of the first things you should check to see if you have a prepayment penalty on your current loan. You can check the original note of your loan, or simply inquire with your current loan servicer. If you do have a prepayment penalty, you will want to find out when it expires and what the claculation is for the penalty.
If your ARM Rate has Adjusted, you should act quickly to see what your available options are to avoid paying another month's of mortgage interest based on a fluctuating index. A refinance into a long-term loan is a popular choice as market will take some time to settle down.
If your ARM Rate adjusted, check to make sure that your original note states the terms in which your rate is allowed to adjust. The maximum amount a loan can adjust is referred to as your cap(s) on your loan. There is usually a first period adjustment cap, a cap for each adjustment period thereafter, and a lifetime cap. For example, someone with 3/1/7 caps means the interest rate can adjust upward 3% in the first adjustment after the fixed period, 1% max each subsequent adjustment, and 7% maximum over the life of the loan.
If your ARM Rate Adjusted recently or is about to adjust, it is a good idea to make sure all of your recent credit payments have been made on time. A quick consultation with a mortgage professional will let you know what can be done now. If you do not currently qualify, your mortgage professional should be able to tell you what you will need to do to be in a better position in the near future.
When your ARM rate goes up, you can count on it continuing to increase every 6 months or year until you reach the rate limit, which could be 15% or higher. Instead of paying all of that increased interest, why not discuss with your mortgage broker a plan to help that will provide stable, lower monthly payments for the full 30 years.
