By Corey T Bruhn
Adjustable home loans provided people with all credit grades the ability to buy homes or refinance their mortgages just a few short years ago. Adjustable home loans offered lower rates then a fixed rate loan and this helped people buy a little more house then they could afford with a fixed rate loan.
When The Adjustable Rate Mortgage Problems Started
When the real estate and credit markets started to slow and property values fall many people found themselves unable to refinance their ARM mortgage. This inability to refinance was the direct result of banks cutting loan programs for bad credit borrowers and property values falling.Many borrowers were now facing ARM mortgages with rates and payments that were increasing to a point where they were not able to pay their payments. Foreclosures then started to happen at an alarming rate. If you are one of these borrowers the tips bellow can help you save your home.
What You Can Do If You Cannot Refinance Your ARM Mortgage
Today all the major lenders know that adjustable rate mortgages are the main reason people are losing their homes and the banks are losing money. To combat this many banks are now letting people modify their existing loan in order to make their mortgage more affordable and also more stable by making the ARM a fixed rate loan.In most cases the lender will evaluate your current income and other assets to determine your ability to make the new payment amount. Generally they will want to see your debt to income ratios are 40-45%. Any higher and they my not modify your loan due to risk factors.
How Can I Figure My Debt Ratio
Your debt to income ratio can be figured by taking you monthly bills like credit card payments,car payment mortgage payments and property tax payments and dividing it by your gross monthly income. So if you had $800 in payments every month and made $2000 your debt to income would be 40% or 800/2000=.4 or 40%. Bills not figured into the equation are utility payments,phone bills and other similar expenses. Getting a loan modification for adjustable rate mortgages is not as hard as people think but keep in mind your lender is only going to modify loans that will be paid back.Adjustable Rate Mortgages can be feast or famine these days. Find out what an adjustable rate mortgage is and if this type of loan is right for you. Read our adjustable rate mortgage help information at http://www.adjustablemortgageinfo.com/
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