People should think carefully about their ability to afford future monthly payments as their rates adjust; and plan accordingly.
The following tips may offer borrower's that hold adjustable rate mortgages some peace of mind.
Look on your monthly statement and be very aware of the adjustment or "reset" date of your loan's rate. Make a note of this date and plan accordingly, as the monthly payment can increase substantially.
Be aware of what type of ARM you have. Know the terms and conditions of the loan. Be aware of any pre-payment penalties. Be aware of the important terms you need to know regarding your loan situation (see list below). Always contact your lender with any questions.
Do not wait until the last minute to refinance your ARM loan before the reset date. Remember that loans take time to process. Be sure to give your lenders ample time or this. Check all references and schedule a set date for the closing of your refinancing. The best plan would be to begin the process of refinancing at least 2-3 months prior to your reset date.
If you are a borrower, and already facing loan problems, you should:
Know and discuss your options. Your options may include forbearance (which means the lender gives the borrower additional time to make payments), at this point in time mortgage modification and assistance with the selling of the home occurs.
Be careful to watch out for scams! Be leery of people who identify themselves as "foreclosure specialists." These people make promises to solve all your mortgage problems by paying off your mortgage for a fee.
Speak with a representative of a government-approved housing counseling agency. Visit the HUD - Housing and Urban Development web page for a list of approved agencies. Additional help is available from the Homeownership Preservation Foundation - HOPF. Call this toll-free hotline to speak to certified counselors dedicated to helping prevent foreclosures at 888-995-HOPE.
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