Should I be worried about my mortgage?
The recent increase in the number of foreclosures and late payments on so-called “risky” loans has created a great deal of concern for homeowners. What are some signs that homeowners should look for to avoid falling behind:
- Is the balance of your mortgage going up?
This is referred to as Negative Amortization. This occurs when your minimum monthly payment does not cover the amount of interest that has accrued on the loan. The difference between the interest owed and your monthly payment is added to the balance of your mortgage. As your balance increases the equity in your home decreases. In this situation it may make sense to contact a mortgage professional to look at your options.
- Are you relying on credit cards to cover regular monthly expenses?
If you’ve noticed an increase in your credit card debt due to the high payment on your mortgage it may make sense to look at restructuring the loan and your consumer debt. Being realistic about your finances is the first step to avoiding a problem.
- Do you have an adjustable rate loan set to increase
Over the past few years adjustable rate mortgages were very popular as home values increased. The key is knowing when to say when. Look at the adjustable rate note you signed with your last mortgage, pay attention to the “index”. Some examples are libor, treasury note, mta, etc. After you identify the index locate the “margin”. This is the amount that will be added to the index. The index plus the margin make up the new rate. Sounds confusing but it’s pretty simple. Once you’ve determined the new rate you can decide if it makes sense to consider refinancing. You know the saying, “an ounce of prevention is worth a pound of cure.
In times like these, it takes more than good credit to get the right loan program, it takes knowledge and experience. My goal is to provide new and existing homeowners with the information they need to make an informed decision, I learned a long time ago that if you act in the best interest of your customer, you won’t ever have to worry about keeping them.
As a free service we offer a complete loan analysis from your previous closing documents. You can either give me a call or shoot me an e-mail.