Adjustable Rate Mortgages are On the Rise

What you need to know to save money with the increasing rates.

There is an estimated two million 3 and 5 year adjustable rate mortgages (ARMs
) set to adjust in coming months. The adjustable rate mortgages that are about
to adjust are all predicted to go up as high as fifty percent. This fact has many homeowners ready to panic since there are around five billion to one trillion dollars worth of adjustable rate mortgages that are on the rise.

The good news is that by having an adjustable rate mortgage you have already seen a savings in interest of thousands over the last few years. Now if you are worried that the new rate for your ARM is going to be a bit more than you can manage there is good news there as well. The options that exist for those facing an increase in both interest rates and monthly mortgage payments may surprise you.

Many Homeowners Need Not Worry

There are options for refinancing to a fixed rate mortgage. If you are worried about basically starting over with a mortgage that you are nearly through paying off you shouldn't be. By refinancing to a fixed rate mortgage you will no longer have to worry about your interest rate adjusting every few months as the market works to find some measure of stability. In the event that you cannot find a fixed rate that you are comfortable with then there is also the option of refinancing your home with another mortgage with an adjustable rate.

When you refinance to another adjustable rate mortgage it provides you with a lower interest rate that is set for a specified amount of time, usually 3 to 5 years. Both of these options will save you on the currently increasing rates. Even an interest increase of one percent can make payments go up from a hundred to five hundred dollars or more a month.

Since the adjustable rate mortgage will follow the market trend check a reliable refinance calculator on the web. When you refinance not only do you have the possibility of a lower interest rate you could possibly lower the monthly payment.

Some homeowners are opting for a fixed rate mortgage in order to get the security that goes with knowing that the rate will not increase in the future. Due to the current status of the market the interest rate for a thirty year fixed rate mortgage is not much higher than it is for a short term adjustable rate mortgage.

Those with hybrid mortgages that are fixed for a time then adjust should look into refinancing now. Once the adjustable rates kick in there is the possibility of having higher payments and interest rates. If you are in an adjustable rate at the present time it is, of course, in your best interest to refinance before your payments start to increase. If you have a home equity line of credit or second mortgage, more than likely the interest rate has already increased dramatically and it will be better to consolidate that into the refinance.