If you had take an adjustable rate mortgage to acquire you home, in all probability the applicable interest rate would have adjusted to over 6% after a series of interest rate hikes by the US Fed. It is now a little uncertain if the Fed will raise rates further or hold them steady. An increase in the rate will dent your pocket further and if you have a fixed instalment scheme for your mortgage, you will start loosing equity in your home as a greater part of your payment will go towards servicing the interest component.
While ARM rates have gone up, long term interest rates are quite steady and almost the same as ARM rates. For a homeowner with an ARM mortgage, it may be ideal to get his mortgage refinanced and convert it to a fixed rate loan. In refinancing, the homeowner will be able to cash out some home equity as well.
Click here to see what CNN has to say about the changing interest rate scenario.
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