When does your Mortgage Adjust?

With over 2.5 million mortgages schedule to adjust in the next 12 months there is a good chance that you have an adjustable rate mortgage (ARM) or know some one that does. If you have an ARM there is no reason to panic, with a little planning you shouldn't have a problem with finding a new loan that you can afford, BUT you MUST plan a head. A majority of people suffering problems or facing foreclosure becuase their ARM adjusted was because they DIDN'T PLAN!!! The mortgage industry has changed drastically over the last 6 months and it may cause a problem for you when you try to refinance.

Start developing a plan 6-12 months before your ARM adjusts. Talk to a mortgage lender and have them look at options that are available to you now. Even though rates are historically low, most likely your payment is going to going to increase and is important that you know in advance how much higher your payment will be (especially if you have interest only ARM). If you know 6-12 months in advance that your payment is going to increase by $300 you can develop a budget now, that will help you afford the higher mortgage payment.

With the elimination of programs in the mortage industry over the last six months, you might also have a hard time qualifing for a new mortgage. Not only have programs been eliminated, guidlines are now, much more strict making it difficult for many to qualify for a new loan. Talking to a lender in advance will help you understand why you don't qualify now, and provide time for you to make adjustments so you can qualify in 6-12 months.

Also, in a few areas in Colorado houses have depreciated, therefore, your house may be worth less than what you currently owe on your mortgage. While you might still be able to refinance your mortgage, it will be more difficult and the extra time will ensure that you find a new mortgage before your existing ARM adjusts.

Another thing to consider, is that you may be better off selling your house and down sizing to smaller house that is more affordable. I know, it's not the best time sell your house and you may have to offer it at a reduced price, but the more time you have to sell your house the better chance you have. Also, it's a great time to buy a house, there are a lot of great houses available at reduced prices which should offset the money you lose when you sell your current house. If you end up losing a little money, it's still better than losing your house in foreclosure.


Prosperity Financial, LLC
http://www.myprosperityfinancial.com/
Your Colorado Mortgage Manager