If you’re still paying on an Adjustable Rate Mortgage loan, or worse yet, an Option Adjustable Rate Mortgage now may be the time to kick this high-risk home loan to the curb. Mortgage rates have been in near free fall for the past six-week and there may be no better time to trade in your ARM for the security of a fixed-rate mortgage. Peter Miller of HSH.com explores some of the reasons for ditching Adjustable Rate Mortgage loans in this article:
“The problem is that a significant part of our housing is still mortgaged with ARMs,” said Michael A. Greiner, a bankruptcy specialist. “Interest rates have been at historic lows for years now. But we are already starting to see upward pressure on interest rates. Once interest rates start to rise again, ARM payments will start to rise again.”
If you decide that mortgage refinancing is the right decision for your ARM, you should know that the fees you pay in the process determine how good of a deal you’re getting for your mortgage refi. The reason fees are so important is not just because it represents cash out of your pocket, but it’s an expense you’ll have to recoup before realizing any benefit from your new, lower payment amount.
There are a number of junk fees lenders and brokers use to boost their profits at your expense. Rate lock fees, application fees, courier fees, loan processing fees, and yield spread premium are fees that serve only to separate you from your hard-earned cash. The more you pay the longer it will take you to recoup your closing costs and loan origination fee.
There are also common mortgage mistakes made by many homeowners when mortgage refinancing. Not paying your loan origination fee is one that drives up your interest rate and monthly payment unnecessarily. The fee lenders pay loan originators for marking up your interest rate to cover the loan origination fee and closing costs is called yield spread premium and can add as much as $100 per month to your payments.
You can learn more about getting the best refinance rates for your next home loan without paying unnecessary markup or junk fees by checking out my free Underground Mortgage Refinancing Videos.