Facing A Major Increase in Your
Mortgage Payment? It May Be Time To
Refinance
Many of us are facing increasing mortgage payments in
the months and years ahead because of adjustable rate
mortgages (ARM) that are beginning to adjust. For
some people, their average payment can jump as much as
100% -- from $600 per month to over $1,200 a
month. Unfortunately, it can often be hard to deal
with these sudden jumps in monthly mortgage
payments. If you find yourself in this situation
it may be time to take a serious look at refinancing
your mortgage to ensure that you are able to keep the
house you are in without having to worry about
increasing payments.
No doubt, for some people, often those who plan to
live in the house they are in for five years or less,
adjustable rate mortgages have their benefits.
Payments are often lower up front for the first few
years and then adjust later in the life of the
loan. Unfortunately, some people decide they want
to stay in their house for longer periods of time, or
they may be facing a tough market where they just cannot
sell their home. For these people, ARM's become a
major financial drain. Refinancing is often the
answer that most of these folks need in order to lock in
a low interest rate and have manageable monthly payments
with no surprises.
Many people who refinance their mortgage often find
out that they can lower their monthly payment while at
the same time saving thousands of dollars in interest
over the life of the loan. If you have a $200,000
house and refinance to shave 1% off your interest rate
you could potentially save upwards of $15,000 over the
life of the loan. That is a considerable chunk of
money that can be put to better use - such as setting up
a college education fund for your children or performing
a remodel of part of your home.
Of course, the best
benefit of refinancing your mortgage is that you can
turn your ARM into a traditional mortgage with a set
interest rate for the life of loan with fixed monthly
payments. Of course, nothing stays the same for
long, so you may very well find out that in a few years
you are refinancing again to take advantage of another
drop in interest payments.
There are costs involved in refinancing - typically
you will pay for a home inspection, document preparation
fees, and other similar costs that parallel those you
paid when you first closed on your home. It is
important that you weigh the cost of a refinance against
the total savings you will get from refinancing.
Many people find that the benefits far outweigh the
costs. Considering that they will be locking in
your mortgage payment and, in many cases, lowering your
interest rate, they don't mind paying a little up
front!
Refinancing can help you get your financial life back
under control when facing uncertainty with your home
mortgage payments. It's the perfect tool to use
for home owners of all backgrounds no matter how much
they might owe on their
home. |
