If a reset will increase your mortgage payment when you are barely making ends meet as it is, consider selling, paying off your loan, and starting over.
We Buy Houses – New Orleans LA: The ARM loan is too variable if you have a limited income. An ARM, or adjustable rate mortgage, is not the ideal way to finance a house. You know that now, perhaps, but when you applied for a mortgage and that was made attractive to you, it seemed like the best way to go at the time. At this point you may wish you hadn’t signed for the ARM and are in financial dire straits, making you ineligible for a refinance. Getting a new fixed rate mortgage loan would be the solution but they are hard to qualify for. You must show good credit and a steady employment or income coming in.
If you don’t qualify for a refinance, you may need to abandon ship, so to speak. Selling the house while you still can may be a good option for you. You can always buy another house and this time go for a fixed rate mortgage at a reasonable interest rate. This is, after all, a great time to buy. If you sell and pay off your current mortgage before you get behind on your payments you may still have credit that will qualify you for a new loan anywhere from a month from now to two years out. In the meantime, you can either rent until you gather your resources again and regroup, or you can lease option or rent to own through a real estate investor or wholesaler.
With an ARM you can’t be sure of what your mortgage payments will be once the rates reset. In this difficult and challenging economy it’s best to know exactly what you will have to earn to pay all of your bills. Mortgages with ARM loans can differ as much as several hundred dollars when the interest rates reset. If you are just getting by as it is, and you anticipate your initial payments are going to reset in the future, you might want to see what you can do about gracefully bowing out of your mortgage.
This is not a suggestion that you abandon the house and let it go into foreclosure. That’s the absolute last option and the worst one at that. The best option may be to sell your house quickly and pay off the mortgage that you owe. Then start over and this time around get a fixed rate mortgage so you’ll know what you need to come up with every month without variance.
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