How Do I Get Out of My Conventional ARM Loan?
An adjustable rate mortgage (ARM) can be a risky type of loan if you are facing the chance that your current interest rate could go up significantly over time. There are a number of options that can help you get out of an ARM and into a fixed-rate loan.
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Mortgage Refinance
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Mortgage rates are at historic lows, as of November 2010. Refinancing an ARM into a low, fixed-rate mortgage will offer you more security and a lower mortgage payment. However, refinancing has costs involved. Start by calling your current lender to see if it has a program to help save on those costs. It is advisable to shop around. Remember that interest rates are not the only thing you should be concerned about. Get quotes on what closing costs will be and any points involved.
Loan Modification
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If you do not currently qualify for a mortgage refinance, inquire with your current lender about a loan modification. The lender will tell you the steps required to get the process started. Loan modification can offer alternatives to get your payments lowered with more stable terms or other options that may help you keep from losing your house.
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Convertible Mortgage
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Dig out your old mortgage paperwork and find your Adjustable Rate Mortgage Disclosure forms. You are looking to see if your ARM offers a conversion option. A conversion allows you to change the terms of your mortgage, typically from an ARM to a fixed-rate mortgage, at predetermined times. Some of these conversion options will require you to pay a fee at the time of conversion.
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