Financial Help: How Do I Lower My Adjustable Mortgage Interest Rates?
Signing up for an adjustable-rate mortgage can often give you a lower initial interest rate and a lower monthly payment. After the rate changes, you may be unable to afford your payment. If this is the case, there are steps you can take to get a more affordable payment again.
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Refinance
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One option to lower your interest rate is to refinance your mortgage. You could consider refinancing into a fixed-rate loan. With this process, you take out a new mortgage and use those funds to pay off your existing adjustable-rate loan. You could facilitate this process with your current lender, or you could find a new one.
Streamline Refinance
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Some lenders have streamline refinance programs they might willingly offer you in this situation. With a streamline program, you do not go through the normal approval process that comes with a refinance. If you have a good payment record, the lender will approve you for a new mortgage and pay off your old one. Financial institutions offer this program to retain customers instead of losing them to other lenders.
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Requirements
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If you wish to refinance, you will have to meet qualifications set forth by the lender. Your debt-to-income ratio has to be within an acceptable range, and you must have a certain amount of income in relation to your monthly payments. Your credit profile has to be strong and your credit score must be above a certain point established by the lender. You will usually need to have a good payment record with your existing mortgage to qualify for a refinance.
Loan Modification
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Another option you might pursue is a loan modification. Your existing mortgage lender lets you negotiate new terms for your loan in this process. To qualify, you must show that you have some kind of financial hardship. The lender wants to know that you will otherwise be unable to continue making your mortgage payment and will likely default on the loan. If this is the case, your lender will usually be willing to negotiate so you can stay in your home.
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