The Federal Reserve is raising interest rates again. If you are a homeowner with an Adjustable Rate Mortgage and your introductory period is ending, you could be in for a rude awakening when the lender adjusts your interest rate.
Homeowners that purchased their homes with adjustable rate mortgages, including the ultra-risky interest only and option mortgages, could soon find themselves in financial hot water. These mortgages come with an introductory interest rate, often lasting only five years, where the borrower has fixed payments at a lower interest rate. Some mortgages require little or no loan principal repaid during this introductory period.
The problem comes when at the end of this period when the lender adjusts the interest rate and adds the loan principal back in. Homeowners that were enjoying low monthly mortgage payments may be shocked to see their payments skyrocket. When mortgage lenders adjust interest rates they change the rate you pay to the index your loan is tied to and add their own markup. When the Federal Reserve raises interest rates, as they have for the last seventeen consecutive times, this takes more money out of your pocket and your monthly budget. The Federal Reserve raises interest rates to cool the economy; this is supposed to keep inflation down. The only thing it keeps from inflating is your wallet.
If you are concerned about rising interest rates and your financial stability at the hands of the Federal Reserve, you should refinance your mortgage to a fixed interest rate loan and stop the bleeding. To learn more about refinancing your mortgage and avoiding common homeowner mistakes, register for a free mortgage guidebook using the links below.
To get your free mortgage guidebook visit RefiAdvisor.com using the link below. Louie Latour specializes in showing homeowners how to avoid common mortgage mistakes and predatory lenders. For a free copy of "Mortgage Refinancing: What You Need to Know," which teaches strategies to find the best mortgage and save thousands of dollars in the process, visit Refiadvisor.com. Claim your free guidebook today at: http://www.refiadvisor.com Article Source: http://EzineArticles.com/?expert=Louie_Latour |  |