Help! My adjustable rate mortgage is resetting soon!
August 14th, 2008
What should I do?
Answer - First of all, there’s no need to panic. Unfortunately, due to the recent bad news about the mortgage business and the real estate market, the term “adjustable rate mortgage” has taken on a much nastier reputation than is truly deserved. Furthermore, the real estate market here in the Raleigh-Durham area is stable, which is not the case in other parts of the country, so it is extremely likely that your home has increased in value since you took out your ARM loan. Appreciation is a key factor in looking at whether or not to refinance due to the fact that you may be able to lower your Loan-To-Value, which is the amount that you need to borrow as compared to the value of your home. Another factor to remember and one that is frequently forgotten, is that if you have an ARM, it is very likely that you’ve had a below market interest rate for the length of time that your ARM has been fixed in and thus you’ve been saving a nice amount of change over the past few years. I call this “winning the mortgage game”.
Start the process of deciding what to do by calling your mortgage professional. A five minute phone call is truly all that is needed to find out what the best strategy is for your situation. If you have your Mortgage Note handy (check the stack of papers that you stashed somewhere safe that were a part of your “closing package” from the day you closed on your current loan). There will be information in this document regarding your “index”, “margin”, and other items that will allow your mortgage professional to advise you about what rate your ARM is likely to adjust to when you arrive at the adjustment date.
Your mortgage consultant should be able to advise you quickly about whether you should make a change (refinance) or just keep what you have. While lending options have diminished somewhat do to tightening underwriting guidelines, any borrower with even a small amount of equity (5-10%), decent credit, and income that is appropriate for their debts, should be able to refinance if that is the best choice.
More questions?? Would you like to have quick mortgage analysis run on your situation??
Call Andy Holloman, Carolina Mortgage Consultants, 919-439-3904 or email Andy@CarolinaMortgageConsultants.com, a member of the team at Michelle & Associates, Inc.
For your real estate questions and needs, contact Michelle Edwards, Michelle & Associates, Inc., 919-306-1639 or email michelle@cmetobuy.com.
