Should You Refinance That Adjustable Rate Mortgage?
Adjustable rate mortgages allowed many people to get moved into the house they wanted, even when it may not have been possible with other types of financing. This was very convenient at the time because interest rates were low and things looked very good. But, for some, there may be a little cloud over your head because its status may be about ready to change. Here are some things that will help you to decide if you need to refinance your adjustable rate mortgage.
Your adjustable rate mortgage has had its fixed rate portion of time, and now it is about to go to a non-stable adjustable rate. As you very well know, the adjustable rate could change every month, or at least every year. The uncertainty is there because not you, or anyone else on this planet, knows what the economic future holds.
This means that there will always be a strong amount of uncertainty attached to this type of mortgage. Refinancing is a possible solution – but only if you are planning on staying in that house for awhile. To get a new mortgage, means that you will have new expenses involved in the closing and processing of it. Refinancing will add both to your overall debt, and will probably increase your payments, too.
While only you can decide if it really is a good time, you also need to be aware that if you do wait too long, then you may not be able to get a good interest rate. Having a fixed rate mortgage, at a higher rate may not be much better than having a high interest rate adjustable mortgage. It is possible that you may not be able to afford either one. In either case, if the interest does go back down, you could refinance again. This means your best option may be to refinance when you can and get the lower rates – at least they will be guaranteed.
If you see that you can ever get a lower interest rate on a fixed rate than on what you have now – the decision should be obvious. Get the fixed rate mortgage as quickly as you can.
One of the only means that may indicate that it is a good time to refinance is to watch the market carefully. Observe the trends that reveal whether there most likely will be an increase in the interest rates. If the experts predict that rates are likely to keep on rising, then you know it is probably a good time to get a new mortgage.
The bottom line about refinancing may be something as simple as how well you sleep at night. If you are spending time worrying about it, or if your mate is, then it may be worth that better sleep to have something more predictable. Before you sign on a new contract, though, be sure that you carefully compare a number of offers so that you make sure you get the best deal available to you.
Joseph Kenny
View all articles by Joseph Kenny
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