| If you're one of the millions of homeowners who used | | | | you'll have to refinance your existing mortgage. |
| an ARM to finance their home, you need to know how | | | | Here are ways to help yourself get a low mortgage |
| to get a low mortgage rate refinance before your | | | | rate refinance: |
| ARM resets. Adjustable Rate Mortgages (ARMs) | | | | Be proactive. |
| were very popular because they allow a lower initial | | | | Don't wait until your loan resets and your mortgage |
| payment for the same amount a buyer spends on | | | | payment goes through the roof until you try to |
| their home. What many buyers don't take into account | | | | refinance. That's huge mistake that homeowners |
| is that they are called adjustable rate mortgages for a | | | | make for many reasons. If you wait until your house |
| reason; their interest rate adjusts. | | | | payment rises, your total monthly debt payments will |
| The interest rate always adjusts upwards. It's written | | | | rise and that could affect your credit score, and may |
| into the terms of the mortgage for all to see. Buyers | | | | make you miss or be late on other bills. Don't let that |
| tend to ignore the fact that the clock is running, | | | | happen. |
| although with the massive publicity that adjustable rate | | | | Do everything you can to increase your credit score |
| mortgages have received recently, that's getting much | | | | before you apply for a refinance. |
| harder to do. The other contributing factor is that many | | | | The difference in just a few points on your FICO |
| buyers bought using ARMs but were planning to | | | | score can make up to an entire percentage point |
| refinance into a fixed rate mortgage before their ARM | | | | difference in the mortgage interest rate you'll pay on |
| reset. Historically home values rose, so that the buyers | | | | your new mortgage. For example as this is written |
| could refinance their ARMs into fixed rate mortgages | | | | someone with a FICO credit score of 674 will pay an |
| at fairly low interest rates and even pull out some of | | | | 8.159% mortgage interest rate, while someone with a |
| their home equity in the process. | | | | FICO credit score of 675 will pay an interest rate of |
| Unfortunately buyers in many areas counted on the | | | | only 7.009%. It doesn't take much to go from a 674 to |
| historical home value appreciation, and either waited | | | | a 675, but you can see that the benefits are huge. |
| too long or bought too late, because many areas of | | | | Take advantage of the Federal Mortgage Relief |
| the country began experiencing real estate | | | | Initiative. |
| depreciation. The decline in home values left many | | | | This government program was designed to help |
| buyers with ARMs unable to refinance into fixed rate | | | | homeowners who need to refinance their mortgages |
| mortgages because the value of their homes was no | | | | at a lower interest rate. The Federal Reserve Bank of |
| longer high enough to provide the lender enough | | | | Boston and the Massachusetts Bankers Association |
| collateral for the loan. | | | | (MBA) announced in June of 2008 that the Mortgage |
| If, for example, a home was purchased 3 years ago | | | | Relief initiative is growing beyond the initial 5 banks |
| using an ARM for $395,000, in some areas of the | | | | involved with the program. Now more than 50 banks |
| country it may be only worth $325,000 now. If the | | | | throughout New England are participating in the |
| balance owed on the mortgage is still $392,000, a | | | | mortgage program that could end up helping thousands |
| lender won't give enough of a loan against the | | | | of homeowners refinance their mortgages. |
| property to refinance the ARM into a fixed rate | | | | Get an FHA refinance through the federal FHASecure |
| mortgage. The borrower would have to write a check | | | | program. |
| for the difference between the home's value and the | | | | This program allows homeowners to refinance their |
| outstanding balance on the existing mortgage. Writing | | | | non FHA ARMs into a low rate FHA mortgage |
| such a large check is something few homeowners are | | | | through hundreds of FHA approved lenders.To |
| able to do, so when their ARM's interest rate adjusts | | | | refinance with FHA Secure you have to be current on |
| upwards, their payment grows and they're stuck with | | | | your mortgage or be in default because either your |
| a much high monthly house payment. The high | | | | ARM reset or your option ARM recast and you could |
| payment, combined with the rising price of fuel and | | | | no longer afford the payments. |
| food, can put many homeowners over the edge. | | | | If you have a adjustable rate mortgage, don't be a |
| If you're stuck in this scenario, here's what can you do | | | | statistic. There's no reason you have to endure higher |
| to get a low mortgage rate refinance and get out of | | | | mortgage payments. Help is available to you if you |
| your ARM before it resets, or resets again. The better | | | | look for it. The key is to act early if you want to get a |
| your credit and the more equity or less underwater | | | | low rate mortgage refinance. |
| you are in your current mortgage, the better options | | | | |