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How Can I Keep An Adjustable Rate Mortgage (ARM) From Going Up?

By Bob Redtree

The interest rate on your adjustable rate mortgage is set for periodic review by the conditions set forth in your mortgage documents. The interest rate may increase or decrease, depending on the index that the interest rates are pegged to. So, what can you do to avoid your adjustable rate mortgage (ARM) from going up?

Refinance Your Adjustable Rate Mortgage

The only sure way to prevent the interest rate on an adjustable rate mortgage from going up is to refinance into a fixed rate mortgage. When interest rates are starting to increase, it is time to refinance and take advantage of the current low interest rates on a fixed rate mortgage. Typically the interest rate on a fixed rate mortgage is slightly higher than on an adjustable rate mortgage because the risk to the lender is slightly higher.

Convert Your Adjustable Rate Mortgage Into A Fixed Rate Mortgage

Check the terms and conditions of your current adjustable rate mortgage. Often there is a clause in the document that allows you to convert your adjustable rate mortgage into a fixed rate mortgage without going through the hassles and expense of refinancing your house. Lenders will often include this clause into the mortgage documents, because they don’t want to lose you as a customer, which they will do if you refinance.

Modify The Terms Of Your Adjustable Rate Mortgage

Some lenders will allow you to modify the terms of the adjustable rate mortgage that you have in place. If you will experience difficulty meeting the higher monthly payments because the interest rate on your adjustable rate mortgage is going up, contact your lender about your situation. Often they will modify your loan terms, interest rates, or adjustment period to give you temporary relief. The lender would rather work with you, so that you can make your monthly payment, rather than have to foreclose on your house.

It never hurts to ask.

Related posts:

1. How Much Is My Adjustable Rate Mortgage Costing Me?
2. Is It Time to Refinance Your Adjustable Rate Mortgage?
3. How Can I Stabilize My Adjustable Rate Mortgage Payments?
4. Can I Convert My ARM Loan To A Fixed Interest Rate Mortgage?
5. What Are The Terms And Conditions Of A Mortgage?