Palm Beach Real Estate and Loans

Happy Friday Everyone-

The last 2 days I've been talking about checking on your current mortgage - I want you to be sure that you know exactly what you have and I discussed several ways that you could have been tricked.

Now, if you looked through all of your paperwork and everything checks out.... GREAT!  That's how it should be.

However, if the mortgage on your Palm Beach real estate is NOT what you thought you had then it's time to fix things.

The most frequent issue is that someone has an Adjustable Rate Mortgage (ARM) - but they thought it was fixed.

If that's the case, the next thing to check on is how long the initial period is before the first adjustment can take place.  That is generally  2, 3, 5, 7 or as long as 10 years.

What happens when that term is up?  The interest rate can increase - it doesn't HAVE TO go up, but this is one of those times that you should assume the worst - that way you won't get next month's bill and see that the payment has gone through the roof!

A typical adjustment schedule would be 2/2/6 where:

• The first # is the amount that the interest rate can increase the first month after the initial fixed period is over.
• The second # is the amount that it can increase at the end of each 12 month period thereafter.
• The third # is the cap on the total increase for the life of the loan.

To make all of that sound easier, say you have an ARM with an initial fixed term of 24 months and an interest rate 5.5%.

• At the 25th month the rate can go up to 7.5%
• At the 37th month the rate can go up to 9.5%
• And at the 49th month the rate could hit 11.5% - more then DOUBLE where it started.

Those are the maximum increases in the shortest time span possible.  But you need to plan for the worst BEFORE it happens.

It all boils down to this: if you're surprised by (or just not happy with) what you currently have, the time to refinance is NOW.

As always - feel free to contact me if you have any questions.

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