Strategies for your Adjustable Rate Mortgage - Fixing your ARM - Personal Finance - Financial Education Center for Investors

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Sell, Stay, or Bust
Deciding what to do with your Adjustable Rate Mortgage
As more people are faced with the decision of Sell, Stay, or Bust, there are some simple things to consider if you have reached a point where your new house payment courtesy of your increased adjustable rate mortgage is worth the effort.

Regardless of how much your house is worth on the market, if your cost of housing has increased to 75% of your income or more, it may be time to call it quits. While the down side is no more house, the upside is no more house payment.

If your housing costs have risen but you think you can ride the rate hikes out, consider examining your budget for holes that can be plugged in the short-term. Unfortunately, my best guess is that rates (the one your mortgage company uses to adjust your payments) wonšt begin to fall for another nine months or so. So buckle down and stay on a tight budget.

Or you could refinance your mortgage, which would probably increase the amount of the loan. This is because, in all likelihood, you would be borrowing all of the closing costs and the points. The upside is a new fixed payment; the downside, no chance that your house payment might fall when the economy improves. This last one only works if you have made all of your payments on time.