Mortgage Refinancing for a Fixed Rate Mortgage

It wasn't all that long ago that many Boston home buyers were opting for the adjustable rate mortgage because it offered the allure of low monthly payments.  However, many of these Boston home buyers also found out that these adjustable rate mortgages had danger lurking behind them in that at any time their interest rate could jump and their home mortgage payment would jump along with it, often to a price that was much higher than they could afford to pay.

Mortgage refinancing to a fixed rate mortgage is one way to get out of your volatile adjustable rate mortgage.  There are many allures to being at a fixed rate, the main one being that you can probably lock in a more attractive fixed interest rate, especially if your ARM has recently increased, as well as bring your monthly payment down to a level that you can deal with.  Even if you are not able to lower your payment all that much, it is still better to have the peace of mind that your house payment is going to stay the same.

Adjustable rate mortgages often had many dangers that lurked behind them, but they were so good that they were hard to refuse.  Many had introductory rates that began at 5.59%, which was lower than most of the fixed rate interest rates.  Unfortunately, many people failed to realize these were introductory rates and many lenders did not stress that fact.  Soon, they were rising as much as two points a year, which means a substantial rise in your mortgage payment.  This is why many are now looking for mortgage refinancing to drop them down to a rate and keep them there.

There are certain cases in which the ARM may make sense.  If you planned on purchasing the house and moving in a few years, then it was a good opportunity to get a low interest rate for that time period.  But, if you planned on finding a house that you and your family could live in for years to come, your home mortgage payment would soon be making its way up to around 8%.  That means your mortgage increases considerably along with the interest rate.

If you are a Boston homeowner with an adjustable rate mortgage, you should consider mortgage refinancing to lock you in at a reasonable fixed rate mortgage.  Before you do, however, it's important to ensure that your ARM doesn't have an pre-payment penalties which may not make it affordable for your to do mortgage refinancing.

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