I have been on the phones a lot more lately as I've shifted my responsibilities from purely marketing to selling and marketing. This shift has also accounted for a decrease in during-work-hours posting. I'm trying to change the latter; but am ecstatic to be doing the former. I love helping people. I love being able to say that with out worrying what anyone reading it will think.
I have been talking to a lot of home owners who are in a precarious situation. The story goes something like this:
- They received a notice from their lender, something about their rate - they can't remember when they received it or what it said exactly but they thought they should call me (great idea)
- I inquire about the type of loan they have and in most cases they have a two-year ARM that is set to adjust.
- They ask the question "Do you think my rate will go up?"
- I answer "think" is the wrong word choice
- They ask "What can we do?"
- I evaluate their situation; provide them refinance options and present them a complete solution to avoid the costly rate adjustment and increase in monthly payments associated with it
- They look at the interest rate that I've quoted them an they invariably say with a frown: "But that rate is higher than what I have right now - my mortgage payment still goes up."
- I say "Yes" and start the education process all over again
Here's the thing folks, mortgage rates aren't getting any prettier. The idea behind refinancing is to protect you from sudden, large interest rate and payment spikes by locking in for a fixed period of time. No one said there wouldn't be a little pain in the process.
Realtors, if you have past clients that took ARMs to buy houses, call them up, ask how their doing with their house payments - if its been two years have them talk to a loan agent they trust. It's a great reason to check in, it impresses them that you actually cared to remember how they bought their home, it shows you care about their situation. It may save your past (and hopefully future) client a lot of pain - you can be the hero.
Money is no longer cheap like it was during the irrational boom days - it costs money, lots, to borrow it. So expect for interest rates to increase; but know it is will go much higher when an ARM resets to its fully indexed rate.
Do the math, but look at the facts - a little pain now is a lot better than unbearable pain that can end in losing a house.
Learn more with a few of these previous posts on the subject of ARM resets:
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