Mortgage Refinance Can Save Your Home From Foreclosure

           

The housing crash of 2008 sent many homeowners and investors into a tailspin as credit evaporated, jobs disappeared, and variable rate mortgages reset to astronomically high levels. My husband and I were first time buyers, so we were taken in by the allure of the low introductory interest rates of adjustable rate mortgages, with plans of a mortgage refinance in the future. However, like many others, we never thought we would have to refinance so soon after taking on the loan because of a failing economy. In order to refinance your mortgage, you need to act as quickly as possible.

A mortgage refinance is usually imperative just before an adjustable rate mortgage, or ARM, gets ready to reset, and since ARMs have been so attractive and easy to come by, households across the country are in this situation. The initially low interest rate is available because ARMs are less of a risk to the banks that offer them, as when the interest rate resets the bank is set to make up for any loss it might have had.

Odds are, if you signed into an adjustable interest rate and needed to refinance your mortgage, you were attracted to it as a borrower because it enabled you to get into a bigger and better house for less initial money. An immediate mortgage refinance might not have been needed for ARM loans even ten years ago, but the recent dumping of real estate values put today's homeowner in an entirely different market.

Often, if a house's value sinks below a certain percentage of the actual loan, a bank will not offer refinancing because they stand to lose too much money. This means borrowers have to act quickly, because homes lose more market value every day. Several factors determine whether you might need to refinance your mortgage for an ARM loan and what the conditions of the new loan will be. This is why choosing the right lender to perform the mortgage refinance will go a long way towards salvation.

For those who are able to, the method to protect one's self from a reset is to pay down enough of the principal that an increased interest rate will not be devastating. However, for the majority of ARM holders who cannot pay more than the minimum monthly payment, it is often best to refinance your mortgage, reduce the impact of your mortgage payment, and still be able to keep your family's home.

About the author

Marie Schaff has lived in Phoenix her whole life, and was saved from a devastatingly high monthly mortgage by getting a mortgage refinance quote and finding a way to refinance out of her adjustable rate mortgage. Having consulted professionals in the field, Marie can now keep her beautiful home, make her mortgage payments comfortably, and help other people who fight the same uphill battle she once did. Protect your investment and find out whether you should refinance your mortgage.