Help Lowering ARM Mortgages

ARM mortgages become problematic when interest rates rise.
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The interest rate on adjustable rate mortgages (ARMs) fluctuates with the index in the credit market. ARM mortgages appeal to young couples who cannot obtain a standard fixed rate mortgage loan. They offer a lower interest rate period that changes to an adjustable rate. This teaser rate often lowers the initial monthly payments for young couples buying their first house. The fluctuating interest rate becomes a problem when interest rates increase, costing the couple more on their monthly payment. Help is available for young families struggling to pay their mortgage.

Call Your Creditor

Your first phone call needs to be your creditor. Explain that you are facing a hardship and see if he can help you lower your monthly payment. Lenders deal with this every day. They review your account, home equity, credit score and financial situation to determine whether to renegotiate your current interest rate or make a payment plan. The worst thing you can do is ignore your creditor phone calls and fail to make payment arrangements.

Refinance Your Loan

Refinancing your mortgage loan creates a new loan contract with new terms, including the interest rate. This option requires you to have some equity in your home and decent credit to obtain a new mortgage. You undergo the entire mortgage loan process again, including the closing on your home. This is one way to get out of an ARM mortgage and into a fixed rate mortgage. Contact your current lender about refinancing your mortgage or apply with a new financial institution.

Home Affordable Modification Program

The Home Affordable Modification Program (HAMP) works to make mortgages affordable to homeowners at risk of foreclosure. These government programs provide financial incentives to creditors to help borrowers meet their financial mortgage obligations. Your mortgage payment must be at least 31 percent of your monthly gross income. You must have a financial hardship that you can document, and your mortgage must have originated on or before Jan. 1, 2009.

Credit Counseling

Credit counselors work to help you meet your financial obligations. They negotiate with your lenders to lower your interest rates and accept payments on past due obligations. Credit counseling helps you get back on track and paying your bills every month. The U.S. Trustee program provides a list of approved credit counseling agencies on its website.

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