For the past decade, homeowners in the United States have benefited greatly from low interest rates. The days of low interest rates may be numbered. For the 11th time since June of 2004 the federal government has raised short term interest rates. After each meeting of the fed, many homeowners with adjustable rates get a monthly statement with higher rates from their mortgage lender. The bad news also trickles in later in the form of adjustments. Higher interest rates mean you will have to dig deep to pay bills.
If you financed your home with an Adjustable Rate Mortgage (ARM) there may be trouble for you on the horizon. For example, suppose you took out a $200,000 three year, 4.5 percent interest rate ARM, three years ago; back then the payment was $1,013.37 a month. After the recent interest rate hikes, now you will be paying 6.25 percent with a monthly mortgage payment of $1,214.56. With more rate hikes on the way you can be sure it will only get worse.
What’s a strapped for cash homeowner to do? Refinance now to a fixed rate mortgage. To find out how to save money when you do this sign up for our free guide: Five Things You Need to Know Before Refinancing Your Mortgage.
My name is Rob Regehr and I’m a personal finance writer with a chip on my shoulder for banks and brokers that take advantage of my friends and neighbors.
