Fix Rate

Refinancing to Fix Rate on Adjustable ARM Mortgage

Adustable Rate Mortgages, with their variable interest rates and payments, are looking more risky in today's rising rate financial environment. Many borrowers with ARM mortgages on their houses are interested in finding ways to fix the rate on these adjustable rate loans. In fact, "Fix Rate" is one of the number one reasons people mention when applying for a refinance today.

Why do home owners want to Fix their Mortgage Rate?
- Fixed Rates are more predictable and stable than Adjustable Rates
- If you Fix the Rate, the payment can never change for the life of the loan
- There is generally little to no out of pocket cost to Fix your mortgage rate
- A Fixed Rate mortgage payment may be lower today than tomorrow's ARM payment

These are only a few of the reasons borrowers choose to refinance and fix their adjustable rate mortgage. We explore these and several other reasons to fix your mortgage rate below:

A popular reason people choose to fix their mortgage rate today is to lock in today's low fixed rate mortgage pricing. In many cases, the new payment after you fix your rate may be lower than the payment on your ARM mortgage, especially if you consider what the ARM payment will be after the introductory fixed rate period is over (usually 2 to 3 years from when you took it out).

There is generally ittle to no out of pocket cost to Fix your mortgage rate. This means that if you have equity in your property and qualifying credit, all costs of refinancing can be rolled into your new mortgage during the refinance itself. This means you do not necessarily have to pay through the nose to fix your rate, a common misconception.

If you fix your rate, the payment can never change for the life of the loan. Put another way, when you Fix Rate, you also Fix Payment. This is a very important benefit to borrowers who are uncomfortable with the idea of their mortgage payment changing in as little as 2 years, or even 1 month on some ARM programs.

Fixed Rate mortgages are more predictable and stable than Adjustable Rate Mortgages (ARM loans), and this allows you to plan your finances far into the future with the peace of mind that the biggest contributor to your housing costs will be set in stone.

The majority of borrowers who refinance to fix rate also want a lower payment, which has not been possible in years past. However borrowers with qualifying credit will find that long term (30 year) fixed rates are currently very competitive with adjustable rates. For borrowers who want to fix their rate, but want the flexibility of making a lower payment when the time comes, there are 30 year fixed rate Interest Only mortgages as well as 30 Year Fixed Rate cash flow option mortgages which allow for multiple lower payment options which can be utilized in months when the borrower would rather allocate more money to another debt, investment or expense, or for times when money is tight. The allows borrowers to fix the rate wthout sacrificing the flexibility they may have in their interest only or option ARM.

» DISCLAIMER: The information contained in this article on 'Fix Rate' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.