One of the biggest fears for many right now is the fact that the mortgage rate reset may be looming. But the day your mortgage interest rate starts its reset is not the time to do something about it. The time to do something about it is now.
While Blown Mortgage recommends that you start 75 days before your mortgage rate reset, I would recommend even more time -- 90 days. The earlier you plan for this adjustment, the better.
Here are some things you should do:
- Figure out what your mortgage payment is going to be after the mortgage rate reset. Your mortgage lender should be able to help you with this.
- Look over your family budget to determine how "doable" the mew mortgage payment is going to be.
- Start now to live as though you will be making that new mortgage payment. Figure out how you can adjust your family budget.
- See if you can refinance your home. This will require working with your mortgage lender to see what can be done. The amount of equity in your home, as well as your credit score, are all going to be factors in whether or not you will be able to refinance.
- Look at options to help you avoid foreclosure. Also, consider such programs as Project Lifeline as ways that you can get help in adjusting your mortgage loan terms to something more manageable.
The whole mortgage rate reset can be a stressful time. But putting it off won't help anything. You need to start preparing now for your mortgage rate reset.
Citigroup was caught out a little while ago sending letters to homeowners warning of increases when a decrease in their mortgage rate would actually be required by the terms of the mortgage. Of course, Citi didn't let on that the payment should go down, since it didn't seem as if they weren't going to lower the payment anyway.
But homeowners should definitely do something within 90 days of the reset if they have an ARM. Even if they have more than 90 days, they can use that time to remove negative information from their credit reports, or pay down debt just a little bit further. Every little bit helps, and even 180 days is really only 6 cycles of bill payments to build up credit.
Posted by: foreclosurefish | April 7, 2008 10:33 AM | Permalink to Comment