Is your mortgage an adjustable rate mortgage, also known as an ARM?
If it is, you want to know – if you don’t already – that your mortgage rate and payment can change.
This isn’t necessarily a bad thing, especially if the rate and payment go DOWN.
However, the interest rate market is slowly trending upwards.
What does this mean for you? It means that once your fixed period in your ARM is up, you are looking at a rate and payment increase. It’s just a matter of time.
If you plan on keeping your home the ARM is tied to, you want to avoid payment and rate increases.
The only way to do that is to refinance the ARM into a fixed rate mortgage.
A fixed rate mortgage – whether a 30 year, 20 year, 15 year or 10 year fixed mortgage – will give you payment and rate stability.
This is important if you plan on keeping your home.
In all likelihood your current ARM rate is low. Know that over time, it will increase. If your intention is to sell your home in the next 3 years, it probably doesn’t make sense to refinance into a fixed rate mortgage and have to incur closing costs.
But if your plan is to keep the home, refinancing into a low fixed rate mortgage (while fixed rates are still low) would be smart.
In conclusion, to avoid a payment increase in your ARM you will have refinance out of your ARM and go into a fixed rate mortgage, whether fixed for 30 years or a shorter term.
Schedule a time to talk to me and I’ll give you my view on whether refinancing into a fixed rate mortgage will benefit you.