Jan 03 2008
ARM Rates: Stay on top of things
If you are the unlucky holder of an Adjustable Rate Mortgage, stay on top of things. In an article last week by the Seattle Post-Intelligencer, they suggest taking out your loan paperwork and checking out the terms of your loan if you are unsure as to the date and amount of the reset.
Knowing when your loan resets may cause some undue stress, but it does help you to put your ducks in a row. Many mortgage lenders look at the housing crisis and blame it on the consumer. I think I would too if I were a mortgage lender, I wouldn’t want this mess pinned on me either. Here is the issue: Lenders look at people as intelligent beings who should care about their own welfare enough to read and understand paperwork before signing loans. Whether you fall into this category or not, you should be trying like the dickens to get out of your loan, and showing some initiative is a good start.
If you are hopelessly lost when you read your loan agreements, ask a friend or even a mortgage broker. The rate will reset on an ARM on a specific day at a margin over what the market rate is at that day (probably the LIBOR rate). This means that if the LIBOR rate, or the London Interbank Offer Rate, is 5%, and your margin or markup is 2.5%, your new payment will be 7.5%. Use a mortgage calculator on the Internet to figure what your monthly payment will be. If you are in trouble, do something if you still can. Perhaps you qualify for the ARM rate freeze, perhaps not, but get talking to professionals who can look at your situation and offer some advice. Do what you can even if it isn’t easy. Foreclosure is not fun.