Many homeowners find themselves in a position where their monthly mortgage payments are steadily increasing because their variable interest rate continues to rise. What started out as a nice low monthly payment with a highly competitive interest rate has ballooned as the economy has changed.
This is especially the case for people who purchased their home only a few years ago. Interest rates were exceptionally low and it was as easy as ever to get into a home. At the time, many people benefited even further as lenders were willing to offer mortgages at even lower introductory rates to home purchasers who opted for a variable interest mortgage loan.
Now, a few years later, interest rates have steadily increased and many people who benefited from their low variable interest rate mortgages are beginning to feel the pinch. In addition, some people with blended mortgages where the interest rate is fixed for a period and then becomes adjustable, are shifting to the variable portion of their payments and seeing their monthly payments jump.
For hundreds of thousands of Americans, it has become difficult or impossible to make their monthly home loan payments. In record numbers, lenders are being forced to foreclose on homeowners with variable interest rate mortgages.
If you are currently dealing with this sort of situation with your variable interest loan, you may be able to fix your interest rate and, in turn, fix your monthly payments. By refinancing your loan to a fixed rate loan, you can stabilize your monthly payments to keep them from rising as interest rates continue to increase.
You may not be able to get a better interest rate than you currently have, but you will have the peace of mind of knowing that you will be able to continue making your payments as long as your income remains constant. Plus, providing that your credit remains good, you should have little trouble refinancing your home again in the future if interest rates fall below your new fixed rate.
Of course if your credit has improved since you signed your current mortgage, you may be able to refinance your home with a fixed interest rate that is better than your current variable rate. In which case you’ll get double the benefit, lower monthly payments and stable monthly payments despite future interest rate hikes.