Due to the housing boom over the past few years, many Americans have taken advantage of low interest rate mortgages. Most of those same people hoped for even lower interest rates, which lured them pursuing adjustable-rate mortgages. During the times when interest rates were low, those who were under an adjustable-rate mortgage had a significant advantage to those who were not. Low interest rates prevailing in the market means lower payments for them in their monthly mortgages.

But as we all know, things did not happen as expected. Today, interest rates are steadily rising. With the present financial crisis sweeping the globe, there are no signs of interest rates decreasing in the coming months or even years. Homeowners with adjustable-rate mortgages are now experiencing a steady rise in their monthly payments as well as a steady decrease in home value.

What is even worse is when negative amortization occurs. The process of negative amortization takes place because adjustable-rate mortgages have caps that limit the mortgage amount within a specific time period. But when this limit is not sufficient to cover the increased interest, the unpaid balance is being added back onto the loan which in-turn gains more interest. So, even if the homeowner is paying on-time, his mortgage balance is increasing instead of decreasing. This could result in the homeowner owing his lender more than he originally borrowed.

If you are one of these homeowners with an adjustable-rate mortgage, the only way you can survive your loan is to convert it into fixed rate mortgage. Once your debt is reduced to a fixed rate, your monthly payment remains constant until the end of your mortgage term and you will not have to worry about fluctuations and increases in your interest rate. Having a fixed payment allows you to be in control of your budget and have a solid financial plan, instead of being at the mercy of the market.

But you could do even more than simply ask for a steady interest rate. You could actually slash a significant amount of money off of your monthly payment. A negotiation with your lender could result in a remarkably lower interest rate than you could possible imagine. This could be quite a daunting task for an individual homeowner like your self to take on so it would be in your best interest to seek the assistance of a reputable expert in loan servicing or loss mitigation to handle the process for you. All you have to do is carefully select a competent loan servicing or loss mitigation firm to handle the process of a loan modification so you can finally relax and sleep at night.


© 2008, Tom Brady
Reprint rights available for free