Give attention to home mortgage
Payments may increase on adjustable rate loans
By Melisa Jarvis Special to the Acorn

If you have an adjustable rate mortgage that's going to reset to a higher interest rate- which in turn will raise your monthly mortgage payment, you need to act now.

Get Ready

More than $3 trillion dollars in adjustable rate mortgages are scheduled to reset this year. As a result, experts predict that foreclosures could double in 2007, and reach an even higher level in 2008.

With all this negative news, you have to wonder if you'll be affected. What are you doing right now to protect yourself? Are you simply waiting for something to happen? I hope not, because you need to be proactive if you have an adjustable rate mortgage.

For instance, have you called your lender to determine what your new monthly payment will be and when it will take effect? Do you have a mortgage that's currently 4.75 percent and headed to 7.5 percent when it adjusts? Do you have a clue as to when that adjustment will occur? Do you know how to calculate this rate change into a payment amount?

Borrowers need to ask themselves the following questions.

•Did you purchase your home in the last three years with less than 10 percent down?

•Have you refinanced your home in the last five years pulling out all or most of the equity?

•Are you paying an interest only or less than the interest owed (negative amortization) every month on your mortgage?

•Are you residing in an area where home values have declined?

•Have you recently been unable to refinance due to lack of equity in your home?

•Has your lender notified you regarding your new payment adjustment?

Contact Your Lender

As standard procedure, your bank or lender will probably send you a letter shortly before the new payment amount goes into effect. The problem is that by then your higher rate and payment will be ready to take effect.

You can't afford to wait for that letter. You need to proactively contact your lender 120 to 180 days in advance and discuss what your options are. Can you refinance? If not, what solutions can your lender offer to allow you to handle the rate increase?

Many of you will see your mortgage payment increase by as musch as 50 percent in the next 18 months. If you can't afford this increase, you need a plan now.

Rock the Boat

Why won't your lender call you early to prepare you for a rate hike? If you're showing no outward signs of being delinquent on your mortgage, the lender- who's servicing your loan on behalf of the investors who loaned you the money to buy a house- has to be sensitive to their desire for a stable investment.

So, depending on the product you have, the lender might not initiate a conversation with you if your loan payments have been coming in on time.

For this reason, you must do the initiating. You have to pay attention to your mortgage, interest rate, and the date it will adjust, and it's up to you to call early instead of waiting to be contacted.

An Immediate Solution

The good news is that a Private Real Estate Investment Fund to assist "good" borrowers who have demonstrated the ability to make their mortgage payments on time and who have also maintained a 700 plus credit score but who are faced with today's serious challenges of our current Real Estate market. Essentially they will provide financing over and beyond the current market value of their home up to the amount equal to the current liens for those borrowers who have shown that they are credit worthy since the purchase of their owner-occupied home and at prime pricing.

There are now available solutions for borrowers currently in default due to their adjustable rate mortgage adjustment as well. This will allow these borrowers the opportunity to bridge the current down turn in values and the upcoming short term notes that are all coming due, with a new "A" paper 5/1, 7/1, 10/1 ARM and whenever possible, a 30-year fixed loan all with interest only options in order for a borrower to stay in their home. This program is intended to allow thousands of hard-working American homeowners the opportunity they need to maintain the biggest investment of their lives.

The opportunity in the market today lies in these "A" Paper borrowers who essentially have the means and/or the ability to be placed into "safer" loans such as fixed rate mortgages with no negative amortization risk. However, due to the fact that such borrowers are currently in these risky loans, they will need "specialized" help to convert their current mortgages into less risky, longer term fixed rate loans that would make the most sense for them from a financial perspective.

Unfortunately, not knowing that such an opportunity may exist for their borrowers, most mortgage bankers and mortgage brokers regretfully have to turn away their valued clients due to the lack of equity needed to carry out the transaction, and thus leaving their clients hopeless and thereby eventually walking away from their most prized possession.

For more information about adjustable rate mortgages, contact Melisa Jarvis at (800) 5683309 or visit www.ssiginc.com or e-mail info@ssiginc.com.