Your ARM is adjusting, your rate is going up, you need to act now

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.

Money is no longer cheap like it was during the irrational boom days – it costs money, lots, to borrow it. So expect for your rate to increase; but know it is going much higher when your 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 costs you your house.

Learn more with a few of these previous posts on the subject of ARM resets: