If you jumped at the chance to save money with an Adjustable Rate or Interest Only mortgage in the last few years, the recent drop in mortgage interest rates should be a welcome reprieve. Over the summer months of May, June, and July, interest rates steadily increased with the 30 Year Fixed rate averaging as high as 6.75%. With inflation worries declining, interest rates have seen a nice drop over the last few weeks with the 30 Year Fixed interest rate averaging around 6.25%.
So, if you are one of the many home owners who jumped at the chance to purchase a larger house by selecting an adjustable rate or interest only mortgage, you may started to feel the financial pressure of rising interest rates, a cooling housing market, and higher prices on food, energy, and consumer goods. While it will take time for the housing market to recover and inflation to be completely reigned in, you can do something about your mortgage right now. Let's look at your available options:
1. Move To A Fixed Rate. Congratulations, you saved money for a few years and can escape into a Fixed Rate loan. You can even take a slightly higher rate to minimize closing costs and loan related fees.
2. Reset The ARM. If you want to continue to benefit from lower Adjustable Rate interest rates, you can select a 3, 5 or 7 year Fixed ARM hybrid and continue to benefit from lower mortgage payments for a few more years.
3. Do Nothing. Not a recommended option as most fully-indexed ARM loans will be charge effective interest rates in the 7% - 8% range. Investigate a no-cost refinance to a Fixed Rate or do an ARM reset.
Interest rates are still low when compared against historical averages. It is time to consider refinancing your existing loan to a low fixed rate to protect yourself against further rate increases and rising monthly mortgage payments
Chuck Aiken - caikens@greenwoodcapco.com
VP, Internet Lending Greenwood Capital, LLC
http://www.greenwoodloans.com/default.asp?cmp=aspro
P.S. Get a Free Report explaining the "24 Key Factors That Affect Your Mortgage Loan Options & Interest Rate" at http://www.24keyfactors.com
