Knowing that your adjustable rate mortgage is going to adjust is not a good feeling to have. And if you are like many home owners across the country your homes value probably has decreased since you purchased it or refinanced the last time. Your home may have even decreased to a point where you now do not have enough equity to refinance your loan.
If you are in this type of situation and refinancing is not an option there is really only one thing you can do to stabilize your payments and save your home. You must ask your lender for help.
First you must absolutely contact the lender that holds your mortgage as soon as possible and before any financial problems begin. Let them know that your property has decreased in value and that you cannot refinance your current adjustable mortgage based on the lower property value.
You must also be honest with them and let them know that the increased payment is going to be hard for you to pay and you fear you may start missing payments as the interest rate continues to climb.
In most cases your lender will give you a loan modification. A loan modification is a process where your lender will change the terms and or the interest rate of your loan. They often change an ARM loan to a fixed rate or extend the fixed rate period of you ARM loan an additional six months to a year.
The goal of a loan modification is making the loan easier for you to pay and avoiding foreclosure. This is now a common practice due to the alarming amount of foreclosures in the nation
Most mortgage lenders will be willing to work with you if you have had a good solid payment history and can show the ability to pay the loan back. They will make you go through an application process and you will have to provide income and asset documentation, but an appraisal is not needed. The standard loan modification normally happens within 30-60 days.