Wednesday, May 31, 2017
How Adjustable Rates Can Be Fixed With A Mortgage Modification
One of the most popular ways for lenders to get people in homes is to offer a low initial interest rate, so the loan is more affordable for the first few years, and then slowly increase that rate. This type of interest rate is referred to as an adjustable rate, and while it is attractive if you are looking for a low payment at the beginning of your loan, it can cause trouble down the road when the rate “adjusts” (which is a nice way to say the rate will increase). These types of mortgage loans proved disastrous for many homeowners across the country and helped cause the foreclosure crisis of a few years ago. The simple truth is that while the initial payments are affordable, as soon as the rate increases the homeowner is unable to make the higher payment. The solution is to find a way to have the rate fixed, so the payment does not fluctuate so much that the payments get too high.
One way to fix an adjustable rate is to modify your existing mortgage loan. Here are some of the ways a modification will help to fix an adjustable rate:
• A modification is a change in the terms of your mortgage loan.
• The term most commonly changed is the interest rate; most times it is lowered from its current rate.
• The change in rate can also be to make a variable rate switch to a fixed rate, giving the consumer assurance that the rate will never again go up as the market fluctuates. When the rate is fixed, so is the payment.
If you have an adjustable rate on your mortgage and are worried it might rise to a level that results in too high of a monthly payment, consider modifying your mortgage to more reasonable terms. The first step in the process is to call your lender and ask for an application for modification. Once you have the application in hand, call us for help. The application can be cumbersome, and the process confusing. Many times the lender will ask you to provide the same documents more than once, but when you let us take over for you we can expedite the process and eliminate duplicate requests.
For more information about mortgage modifications, contact us at www.law-ri.com. We will help by coming up with solutions that work for you and have multiple locations to meet your needs for office visits.