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How Soon Can I Refinance An Adjustable Rate Mortgage?

By Ann White

The time frame for refinancing your adjustable rate mortgage will depend on your individual contract. In general, most adjustable rate mortgages require you to keep the loan for at least two years before refinancing. This practice is pretty standard, because most loans begin the adjustment rate after the initial two year introductory rate. These lenders understand that most adjustable rate mortgages will be refinanced shortly after the interest rates increase. They try to ensure that they make some money from the transaction by placing a time constraint on refinancing. Some lenders do not have this time limit placed on them, the best bet is to review your contract and see when you are available to refinance.

Does My Adjustable Rate Mortgage Have To Be Refinanced?

When you have an adjustable rate mortgage you do not have to refinance it at all. You can keep the loan as an adjustable rate mortgage if you choose, but this will cost you more in the long run. When an adjustable rate mortgage begins to adjust you will see a considerable change in your monthly payment. You will also increase the amount you owe because the principal will not reduce as fast. Most people only hold on to an adjustable rate mortgage during the initial fixed rate period and than refinance to a lower rate.

Will An Adjustable Rate Mortgage Hurt Me Financially?

When your adjustable rate mortgage begins to change you will see an increase in your monthly payment. If you are not financially prepared for this increase in your bills you can be hurt financially. Also, since the principal of the loan will not be paid down as fast as with a fixed rate loan, you will increase your debt burden. An increase in debt can affect your ability to obtain other forms of credit.

Related posts:

1. Why Refinancing to a Fixed Mortgage Rate is Imperative?
2. What Are The Risks Of Adjustable Rate Refinancing?
3. Is It Time to Refinance Your Adjustable Rate Mortgage?
4. What is an Adjustable or Fixed rate Mortgage?
5. What Are The Risks Of An Adjustable Rate Mortgage?