Good morning! Are you in an adjustable rate mortgage? Is it set to adjust this year? Don't panic. The natural inclination is to want to refinance before your interest rate goes up. But I think it's important to weigh all sides before making your decision.
It can be expensive to refinance. Beyond paying the loan originator's standard origination fee (I charge 1%), there are other costs which may include appraisal fee, title fee, escrow fee, prepaid interest, prepaid property taxes, and prepaid hazard insurance to name just a few. The bottom line is all the assorted charges can often add 2-3% to your loan. If a lender is saying there are no points and /or fees, you're paying a higher rate. No one works for free.
My message to you is if you want to refinance out of your ARM, choose to work with someone who knows what they're doing. My profession was recently populated by people who didn't correctly learn the business. They got in it because of the financial rewards and never bothered to learn the nuances of our business. An experienced loan officer will know what makes sense for you. They will give you both sides of the equation so you can make an intelligent decision.
Today, there are new programs that can help you if you have an ARM and want to refinance. One program will allow you to stay in your existing mortgage if you can prove that you wouldn't be able to afford your new payment if your rate adjusted. Another program would allow you to refinance into an FHA goverment backed mortgage at a 30 year fixed interest rate. You can also talk to your lender and see what they'll do. Another option is to refinance into a fixed rate loan. With mortgage rates currently at 5.5% for a 30 year fixed mortgage O.A.C., it might make sense. Again, plan ahead and enlist the help of someone who knows what they're doing.
I hope this helps. I know what we do is very confusing to you. With a trusted advisor by your side, it should ease your pain. Just don't panic! Have a great day!
Paul
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