Option adjustable rate mortgages (ARM) home loans were very popular just a few years ago. That’s because they gave borrowers the ability to decide how large of a mortgage payment they would make each month. Sounds crazy, huh? Let’s take a closer look at these mortgage loans and why it makes sense for you to refinance one—if you can.

Why These Mortgage Loans Are Trouble with a Capital “T”

Mortgage lenders stopped offering option ARMs last year. But the demand for option ARMs resulted in $750 billion of the loans being underwritten from 2004 to 2007, according to Inside Mortgage Finance newsletter. More than half a million of these mortgages are scheduled to reset over the next four years. Many homeowners who have these loans are subject to mortgage rates that can rise and push up their payments to astronomical amounts. As a result, default and foreclosure rates for option ARMs have already surpassed those for subprime mortgages. Read the rest of this entry »

A mortgage refinance can lower your monthly payments and decrease the amount of interest paid over the life of your home loan. But don’t just focus on mortgage rates without understanding everything involved with a refinance. Here are eight mistakes to avoid when refinancing a mortgage.

1. Not shopping around for mortgages is a huge mistake. It’s imperative that you compare different deals to make sure you get the loan package that is right for your situation. Not all mortgage refinancing is the same so slow down and take your time. Read the rest of this entry »