mortgage increased rate

0.10 Dollars($)

We were paying a certain amount for our mortgage payment for over a year for a new home we purchased. All of a sudden our payment almost doubled. How is this possible. I had thought i was because of the taxes, I do not think it should be to that extreme. I had asked the company if it was because they were taxing us on undeveloped land and they said no. I do not understand how they can do this without warning and to increase it to that extreme. Is there anyway we can fight it or at least lower it? Is it legal?

bearboysj · Joined: 25 Oct 2008 Posts: 42 17.00 Dollars($)

Well, this could either be good news or bad news - the good news is there is a possibility that the person who brokered your loan (loan officer) didn't disclose to you that you were being put into an ARM (adjustable rate mortgage) - I would re-review your loan documents to see if there is any indication in the the information if you were told you would be put onto an ARM - the best place to look is your Note, the heading should say the type of loan you are on. If it wasn't disclosed that you were being put into an ARM - you may have some legal recourse by contacting a real estate attorney.

The bad news is its going to take a refinance to get out of it.

Depending on the type of ARM you are currently in, your rate is fixed for a certain period of time - 3 months, 6 months, 1 year, 2 years - after this period your loan payment will re-adjust the tems on the note - some will adjust at current prime + rate and will have a maximum cap - there after every 6 months your rate can only adjust 1% each 6 months (this is just one example).

Did this person do it illegally? I have no idea, somewhere along the lines either someone didn't explain the loan program to you or maybe you didn't quite understand the terms.

Id' suggest grabbing your loan docs and going into a reputable lender and seeing if they can get out of this loan.

Jessica · Posted: Thu Oct 30, 2008 4:52 am Post subject:

Hi Bearboysj,

I agree with you in the sense that perhaps the OP doesn't know that the loan program is an ARM and it has now been through rate reset as a result of which payments have doubled.

Guest, I suggest that you have a straight talk with the lender as to why they have increased your payments.

Regards,

Jessica.

chrisburns · Posted: Thu Oct 30, 2008 5:50 am Post subject:

Option 1 would be a refinance into a 30 year fixed.

If you don't have the credit, income, and/or equity for that option I would suggest you immediately request a loan modification before you go late on the mortgage. Most banks are working with borrowers to decrease the payments. Again this will only be a short term fix (possibly 5 years) untilt the market turns around and allows you to refinance into a fixed loan.

brian1 · Posted: Thu Oct 30, 2008 10:03 am Post subject:

Agree with the above - except the chance of them not disclosing at the close are slim - very slim. It may not have been explained which stinks but more than likely if it is an ARM you signed saying you understood and were ok with it.

Contact the lender and see why first off then contact someone to see if they can get you out of this if it is in fact an adjustable? While you are on the phone ask if there is a pre-payment penalty

Brian

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