Is Your Mortgage Payment Going to Break Your Budget?
You may want to check your current mortgage.

By Jacquelyn Brinker, Branch Manager, Union National Mortgage Company

If you have an adjustable rate loan (aka ARM), you could be in for a huge surprise. The last year brought many financial issues into the spotlight. For those who are still holding an adjustable loan, the time is right to take action!

Points to consider:

Why would I want a fixed rate mortgage? Fixed rate mortgages are, as they sound, a fixed interest rate guaranteed not to change over the life of the loan, regardless of changes in market conditions. This loan is ideal for those who want fixed monthly payments, and who plan to stay in their homes for an extended period of time, or for those who have a low risk tolerance.

Another tidbit about fixed rate mortgages: Fixed rate loans are available in varying terms, that is ten, fifteen, twenty and up to forty years. In the initial years, a fully amortized loan has most of the payment going toward interest and as the principal diminishes, more of the payment is applied to principal. Adding additional principal to your payment each month not only brings the balance down more quickly, it also reduces the amount of interest paid over the life of the loan. Securing a fixed rate mortgage is virtually the same as any other mortgage loan. For more information, please phone our office at 724-934-3444.

Why was I offered an ARM initially? During the housing and refi booms, ARM loans were popular because they offered a lower interest rate, and consequently a lower monthly payment than a fixed rate loan. Many homeowners were willing to take the chance that the rates would remain low for an extended period of time, with the idea that if the rate adjusted too dramatically, a refinance would be an option down the road.

How can my credit score effect my interest rate? Something that has changed from many years ago is how your credit score can effect your mortgage rate, or the costs involved in securing your loan (be it a fixed rate or an adjustable).

Many of the programs that had been available for existing and potential homeowners who have credit scores under 660 and 620 have become extinct, but there are still some options available, so it is always best to consult a reputable lender.

So, if you find your mortgage payment is about to sky-rocket and break your budget, this may be the best time to consider refinancing into a fixed rate mortgage. You may have the advantage of having built up some equity in your home, that may make the refinance even more attractive. There are many solutions that will make your mortgage more affordable than ever. Recent interest rate improvements make this a great time to consider a fixed rate loan because “Your Home Loan Matters.”

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