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Fixed Rate Refinance
Why should you consider a fixed rate refinance for your current ARM Adjustable Rate Mortgage? If you arent concerned with rising adjustable mortgage rates, theres a good chance you should be. Adjustable rates have increased more over the past 18 months than in the preceding 5 years combined. Rising payments on ARM mortgages are projected to account for 50% of all defaults over the next 3 years. Even if your loan is not scheduled to enter its "adjustable" period for some time, please be advised that changes in the lending industry are making it more difficult for borrowers with all types of credit to convert their adjustable rate mortgages to a fixed rate, a trend which industry experts expect to continue for the near future. It may be a long time before the fixed rate refinance option is available as broadly as it is today. The time to act is now. Take advantage of your good credit history and current market conditions to secure a fixed rate mortgage with a low monthly payment today. Fixed rate fully amortizing loans have two distinct features. First, the interest rate remains fixed for the life of the loan. Secondly, the payments remain level for the life of the loan and are structured to repay the loan at the end of the loan term. The most common fixed rate loans are 15 year and 30 year mortgages. Fixed Rate Cash Flow Mortgages allow borrowers the same flexibility found in Option ARM mortgages without any of the risks attributable to the Adjustable Rate feature of those loans. In many cases, customers originally took out ARM loans due to previous credit issues. By the time that ARM is set to adjust to a higher rate, these customers usually have a much better credit profile, whether they realize it or not. This opens the door to a whole host of attractive, fixed-rate mortgage refinance options. If homeowners are experiencing payment shock on their Adjustable Rate Mortgage they should consider a fixed rate refinance loan. A fixed rate refinance gives borrowers protection against rising interest rates over the life of the loan. For those of you experiencing "sticker shock" when shopping for fixed rate mortgages to refinance out of your current adjutable rate, it is you may wish to examine 30 year fixed loans with the following options which allow you to lock in a low rate but make a lower payment for the first 2 to 10 years of the loan: Many people believe they cannot afford the payments when considering refinancing their ARM mortgage into a fixed rate. While it is true that fixed rate mortgages generally have higher rates than the adjustable mortgages they are replacing, they are secure, never increasing for the life of the loan. This is in sharp contrast to most ARM loans, which can increase as much as 6% or more at the FIRST adjustment date. In many adjustable rate mortgages, your payment can even double, or worse. Don't risk your home, start looking at a fixed rate mortgage today. Even if you can't or don't need to lock in a fixed rate for 30 years, fixed rates can be locked in for 3, 5, 7, 10 or more years. You may also want to consider a interest only mortgage refinance. An interest only mortgage carries a slightly higher rate then a traditional mortgage but because you are only paying the interest the payments are lower. You may also send in extra money to applied towards the principal balance every month if you like. There are now 30 Year Fixed Rate mortgages which offer a "Cash Flow" minimum payment option, which allows you to defer interest up to a maximum of 125% of the loan amount. This is one of the most popular options for borrowers converting from ARM loans, because it allows them to use their fixed rate mortgage like a line of credit (except one with no closing costs and usually much lower rates), trading additional cash flow for equity in their property as needed. As many borrowers benefit more from free cash flow than from non-performing home equity, this is a very popular option and is generally safer for the average homeowner than similarly advertised products such as the so called Option ARM loans.
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