Mortgages, Markets, and Money

Experience has taught me that mortgages are intimidating financial instruments for many people, that markets can and do change requiring a rethinking of mortgage planning, and that saving money is always a good thing. I have been a mortgage professional advising borrowers who need residential mortgage financing for over twenty years.

In your current situation, you probably have an excellent rate on an adjustable rate loan and are aware that rates have been on an upward swing. It's likely you are waiting for the expiration of the fixed period of your loan or possibly the end of a pre-payment penalty phase before restructuring your mortgage obligation.

I am in that situation with my current mortgage. I have a 3.875% interest rate on a 5/1, (5 year fixed then annual changes), interest-only loan on my home that is set to begin adjusting in mid 2008. I know that based on the current market, if I let the loan automatically adjust, my rate will automatically adjust to about 7.5%, nearly doubling my interest cost. I will lose money if I sit tight and do nothing. So, refinancing my mortgage is going to be the best solution for me based on today's interest rates and the market and this ensures that I save money.

I know that if I refinance now, I will lose out on the remainder of the tremendous rate advantage I have compared to the market today. So, I am waiting, closely watching the market, trying to determine when the most opportune time will be for me to refinance my mortgage so that I can save money and invest it elsewhere.

There are several other factors that I need to consider to maximize my strategy in addition to the rate change:

-----Because my interest-only period will also expire at the time of my mortgage reset, amortization will begin, increasing my payment.
-----I also am looking at other financial obligations I have and trying to determine if while restructuring the mortgage, I pay these debts off as well to reduce after tax interest cost and improve cash flow.
-----Housing depreciation has me somewhat concerned. My home has appreciated nicely in the four years since I secured this debt. However, if my home value declines, my borrowing power will be diminished.

There is no absolute answer today to what lies ahead. What I will be doing for my family and me is creating a plan that will:

-----Assure that I have the liquidity and credit reserves to make the payments into the distant future to weather any unforeseen situation that may arise.
-----Utilize my equity to maximize my financial growth, diversity and wealth.
-----Optimize the tax advantages provided by Uncle Sam.

This may not be the time for you to make such a move with your current adjustable rate mortgage, as it is not the perfect timing for me. However, it may be time for you to establish a plan to prepare for the upcoming changes.

Please visit my website www.AmericasMortgageStore.com and check out the current market rates, read informative articles, and learn more about mortgage financing and your current situation. I welcome your call so we can begin reviewing your situation now to formulate a timeframe best for your particular situation.