Our President has decided to step in and 'freeze' adjustable rate mortgages. The administration suggests their actions can help 1.2 million homeowners. Another statistic (according to the Center for Responsible Lending) says the freeze will only assist 145,000 homeowners, they say the criteria is too narrow to help more.
The important part is to understand WHO qualifies for the special treatment. The BEST resource I've found is provided by the Wall Street Journal.
Some very specific qualifications for the 'Rate Freeze' are:
- Loan must have been closed from January 1st 2005 - July 30th 2007.
- Must have below 660 FICO score.
- Must have less than 3% equity in their home.
- FICO score cannot be over 10% higher than when home was originally financed.
- The borrower cannot have delinquencies on the mortgage before the rate adjustment takes place.
IF the customer qualifies for the rate freeze, it is good for 5 years.
Let's say you have a $200,000 loan on a 30 Year Amortization. Here's what you're up against (depends on the terms of the adjustment):
- Going From 7% to 8% your payment increases $137.00.
- Going From 7% to 9% your payment increases $279.00.
- Going From 7% to 10% your payment increases $425.00.
Do you see how this gets really ugly? Don't let it happen to you.
If you have questions on what the terms of your adjustment are or if you qualify for the rate freeze, please e-mail me or give me a call. I'd be happy to help!
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