How to Refinance an ARM Mortgage

An ARM mortgage is an adjustable rate mortgage. Depending upon the terms of the mortgage, the interest rate may increase after one, two, five or more years. The increase in the interest rate means the monthly mortgage payment will increase as well. To avoid higher interest rates, learn how to refinance an ARM mortgage.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

• W-2 statements Pay stubs Pay-off amount Previous year tax returns

1. Contact your mortgage company and request a refinance. If the your current company does not agree to a refinance, locate a different mortgage company.

2. Speak with the mortgage company to understand what they can do and what you may need to do.

3. Gather and make copies of your W-2 forms, pay stubs, tax returns, and other documents the mortgage company requests.

4. Submit the documentation to the mortgage company.

5. Ask the mortgage company how long the process will take and check back once a week to understand where they are in the process.

6. Work with the mortgage company to schedule a closing date appointment at the real estate attorney's office.

7. Read and sign the closing documents. Store them in a safe place.

Tips & Warnings

• Check to ensure there is not a prepayment penalty. If there is a prepayment penalty, there is a charge if the mortgage is refinanced. Ask the closing attorneys any questions about the information received. The mortgage company may or may not request a property appraisal. If an appraisal is requested, be prepared to pay out of pocket for it.
• Do not sign the documentation without reading it. When the documents are signed, it is a signal that the information is understood.

References

• Refinance toolbox
• Adjustable rate mortgages basics

Resources

• Is it time to refinance your ARM?
• Pros & cons of an adjustable rate mortgage