Break that A.R.M and Avoid Foreclosure

Lots of people have been adversely affected by the recent hike in prime mortgage rates. An Adjustable Rate will seem promising to the first time buyer because they normally start out at a lower interest rate than most fixed rate loans, and a borrower with a derogatory credit history has a better chance at receiving the ARM. So, in other words, if you're willing to pay out, they'll qualify you for the loan. An adjustable rate mortgage is set on a range of percentages the rates can legally rise to. In most cases, the rates go from an estimated 6.25% to as much as 15-17%. In two years, when that adjustable rate goes up, it could potentially DOUBLE the average monthly mortgage payment, forcing the homeowner to go into foreclosure due to inability to pay such a high rate.

So you got a letter from your mortgage servicing company that states your rate is about to jump, what do you do? If it has been two years since your purchase, REFINANCE! Try to steer clear of the National Lenders that will tempt you with a low fixed rate, and bury you with hidden closing fees. Stay as local as possible. Look up your local mortgage broker, call your bank, find a FIXED-RATE. Remember that the higher your credit score is (minimum is approximately 580), the better your chances are for getting that fixed-rate that everyone wants so badly.

How do you get your refinance to run smoothly as well as quickly? Save your documentation! It's imperative that all documents from the original purchase of your home be kept safe. To refinance, your mortgage broker will need a copy of your HUD-Settlement Statement. This particular document lists the final costs of your purchase. This will allow the mortgage broker on your refinance to prove the purchase price as well as other information on your home.