My New Blog

You may know someone who has been hit hard by the mortgage crisis and having an adjustable mortgage. Many of the local homeowners I speak with and my past clients have been having second thoughts about keeping their adjustable mortgages. They are still well within range of having time to do things, but are wanting the comfort of a fixed rate mortgage. Given current market rates, many have decided to hold off until things look up in mortgage rates. However, that is a risky gamble to pursue. It is not to say that mortgage rates will come back down, time will tell. But if you do wait, you will be forced to accept market conditions and rates when you are forced to refinance due to an impending adjustment to your rate.

Some folks don't have the luxury of waiting. They have an adjustable mortgage that has adjusted and since have gotten behind in their payments. The reason this happens usually is because the driving force behind the rate changing is called the "index". Those first adjustments usually cause payments to skyrocket $300-$500 per month. Some can afford this first adjustment, but the financial strain of the higher payment, plus more adjustments coming in 6 month increments cause many people to fall behind. Usually this comes after savings accounts are drained and relationships are stressed out. Many homeowners are already having a tough time in today's economy, and this can send them over the top.

I have been working closely with my most recent FHA Secure client for almost 60 days. Now, you may think that is a longtime to refinance your home. But if it is due to an adjusted rate that caused your mortgage to become late, this is about average.

These clients had a great credit rating of well over 700 prior to the adjustment of the loan. After collecting all of the necessary documents, and submitting it to underwriting we got an initial suspense on the approval due to income calculations because my client is self-employed. The underwriters were looking at it one way, and I was looking at it also factoring in his 2008 year to date income, through being self-employed and having filed a quarterly estimated payment. Through working closely with the underwriting team, we were able to work through our different approaches to calculating his income and come up with something HUD will accept.

The clients will get their payment back down to where it was before the loan adjusted. However, this will be at 6.375% with a 30-year fixed rate mortgage. Prior, they were in a 40-year mortgage. So by changing the loan, they not only got their payment back to where it is affordable, but knocked 10 years off the life of the loan. This alone will save them well over $80,000 in interest on the loan.  

These loans aren't easy to get approved trust me! I have been the only one at my national mortgage bank of well over 100 branches around the country to get FHA Secure loans approved and closed. It is a great feeling to see folks who have owned homes for quite some time to remain in their home.

If you are or know someone who has gotten behind in their payments AFTER their mortgage adjusted let me know, you never know what can be done!

Ray