I know of someone whose bank offered to renegotiate their ARM mortgage when interest rates were falling. I wonder if there are people who have been successful at renegotiating an Option ARM or ARM loan with their bank when interest rates have been rising. If you have, please send me an e-mail.
If I had a risk of defaulting on a loan, I was thinking the first organization I would consult is the holder of the loan in advance of the possible default. I would tell them that a loan default is a possibility and ask them if there is any way to renegotiate the mortgage to terms that would help me AND the bank. The worst they can say is “no” and I am no worse off than before. And there is a small possibility they may renegotiate to a more favorable fixed rate 15 or 30 year loan.
I believe this approach works best if the holder of the loan is a local bank. Unfortunately, most loans are sold off to larger banks or Fannie Mae. However, it’s still worth asking for a renegotiated mortgage, especially if selling the house may not cover mortgage. In most cases, the bank or Fannie Mae doesn’t want to own the house and would rather have someone paying on a loan.
Disclaimer: I am not a professional in the area of personal finance. Please consult a professional financial advisor before acting on any of the ideas shared. Each person’s situation is unique and the above ideas may not apply.
This is not financial or mortgage advice. Please consult a professional advisor.
Copyright © 2006 Achievement Catalyst, LLC
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