Don’t let your ARM smack you (or your friends)

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If you currently have an adjustable rate or balloon mortgage that is scheduled to adjust within the next 12 months, I strongly encourage you to contact a Mortgage Professional as soon as possible.    Especially if you are considering keeping your home beyond the adjustment date. 

Don’t wait.  Here’s why:

  • Odds are your payment will increase significantly (depending on your caps) and you won’t want the new mortgage payment.
  • Underwriting guidelines have tightened significantly.   If you have issues with your credit, it is best to start work on repairing or improving your scores now instead of waiting until it’s time to refi (that’s too late).
  • Lenders are pulling back on programs.   Especially non-conforming loans (loan amounts over $417,000 or credit, assets, income or employment not meeting traditional guidelines) and ARMs.   
  • Some lenders are shutting their doors as they are not able to fund loans they’ve committed to. 
  • Less available loans may translate to fewer buyers for properties.   This will impact sales comps for appraisals.   You cannot count on huge appreciation or values on your home to bail you out of your ARM.   We’ve been fortunate in Seattle so far; I cannot see how this won’t impact our local market home values.

This is truly an urgent situation that requires your immediate attention.   The more time you can give yourself and your Mortgage Professional to determine the best strategy for your next mortgage, the better off you’ll be.   And, if you know that your friends or family members have ARMs that are due to adjust anytime soon, please encourage them to contact a Mortgage Professional as well. 

Take control of your ARM or it just may leave you stinging.

Comments

  1. Great Information, I came across your blog post looking for some information I had seen on the web a while back which showed a chart which showed how even if a adjustable mortgage made the max adjustment each year after its initial 5 year fixed time it would take until about the 8th or 9th year before the person would have been better off with the 30 year fixed loan.

  2. CSN, often times the home owner will be better off with an ARM; however, if they’re not aware (conscience) of the payment adjustment, they’ll be in for a shock.

    I have found that on average, mortgage payments are adjusting 40% after the fixed period is over.

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