Many homeowners financed their homes with adjustable rate mortgages in the past decade. For many, this was a great strategy to keep payments lower while the Federal Reserve Board lowered short-term interest rates during our financial crisis and recovery.
According to recent actions by the Federal Reserve Board, this era of record low rates has come to an end. What does this mean to you? It means that your adjustable rate mortgage is likely to increase with its next adjustment. As a matter of fact, the rate indices upon which most adjustables have been rising for years…
| One Year Treasuries | One Year Libor | |
| October 2014 | 0.10% | 0.55% |
| Sept 2018 | 2.56% | 2.919% |
It is a simple formula — if the index upon which your adjustable is based rises, your mortgage’s adjustable rate and payment will rise as well. Plus, for many who opted for interest-only payments, the interest-only period on some of these loans may soon come to an end, which means the loan will become fully amortized as you have to start paying principal. Many present homeowners facing these adjustments could wind up paying several hundred dollars per month more.
The solution? Contact us for a free mortgage analysis. There is still time to lock in the security of a low fixed rate mortgage. In addition, if the value of your home has risen, you may have the option to use your new value to eliminate mortgage insurance or pull cash out to pay off non-deductible consumer debts.
We don’t know how much longer today’s low fixed rates will last. It does not cost anything for a free mortgage analysis. The time to act is now before rates go up further.
