A lot of people today that have adjustable rate mortgages are finding out exactly how these loans work. I think for the most part they are good idea, mainly for people who will keep the home for a short period of time, have a large downpayment, or can be reasonably certain they will maintain a solid credit history so they may refinance the loan when it reaches the adjustment period. But not everyone is so fortunate.
If you are having trouble with a loan that has already reset to a higher rate, go to http://faq.fha.gov/cgi-bin/answers_hud.cfg/php/enduser/std_alp.php?p_sid=IKI2wy3j You will find some great info there about refinancing a non-FHA loan to a fixed rate after your existing mortgage has been reset, along with some other important qualifications. There are many restrictions, but this would be a great way to go if you qualify.
Another way to save yourself from an unaffordable payment is to refinance on your own. If your credit is ok, you should still be able to get a new loan, providing you have built up sufficient equity. Loan companies have become more strict in this regard, but if you have 20% equity, you should be able to find a suitable fixed rate mortgage.
If these options are not available to you, talk to your lender about your adjustable rate. Maybe you can negotiate a more favorable rate if you have maintained solid payment history with them. They will be more inclined to talk with you before any issues arise. It can't hurt to ask!
If none of these work, and you don't have a "money angel" you can obtain funds from, you may need to put your house on the market. Isn't it a bad time to sell? Not necessarily; someone is always willing to buy a house at a reasonable price, it just might take longer. I hope it doesn't come to this my friends, but the hard reality is you will need a roof over your head, and it must be affordable. There is no shame in any of this; unique economic circumstances ensure that some will be adversely affected while other prosper to some degree.
ARMs are not bad loans; just be certain that the person you receive information is not biased (listen to your loan officer, but get a second opinion to verify the validity of the information; most loan officers are fair people, but they are selling mortgages, not long-term financial plans)
Thank you for reading!
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