Pointers About Mortgage Rate Freeze
Home loans offering variable or adjustable interest rates can be common in the market. Those mortgage loans with rates that can be adjusted are bound to change which depends on the Prime Rate.
There is a direct relationship between the mortgage loan and prime rate- it is bound to increase when the Prime Rates increases even if the mortgage loan starts out low.
On the other hand, loans having a fixed interest rate remain constant. This is the reason why consumers are advised to go with a fixed-rate loan when acquiring a mortgage. That type of loan has a lower chances of facing foreclosure since the interest rate remains the same all throughout the loan period.
Can it be possible to prevent the interest rate of your loan from increasing? How can freezing of the rate affect and protect you? This article covers mortgage rate free and the benefits that you can get from it.
What is mortgage rate freeze?
Mortgage rate freeze has been approved by President Bush in December 6,2007 to give consumers a more convenient way to deal with their mortgage repayments. The rate freeze is given to those who acquire subprime loans.
In a way, repayment can be a problem because subprime loans have higher interest rates. Once borrowers acquire a rate freeze, they can protect their loan rates from increasing.
For example, let's say that you have a subprime loan. Your interest rate can be doubled or increase by as much as 5% or more, in the succeeding 5 to 10 years. Here, keeping up with your installment payments monthly can be a more difficult task. You can save money from your loan payments by freezing your interest rate. Do you want to know how to get a rate freeze?
Who are allowed to get a rate freeze?
Acquiring a rate freeze isn't just for anybody with a subprime loan. Only 118 thousand homeowners with subprime loans can qualify for a rate freeze, according to the Center for Responsible Lending reports. Bear in mind that there are more than 3.7 million people having subprime mortgage loans.
Who are qualified for a rate freeze? Here are the standard requirements when applying for a rate freeze.
*The borrower must be consistent with the payments being made while the "low rate" applies
*You must be a residential home owner;
*Mortgage loan must be obtained from Jan. 1, 2005 to July 31, 2007 only;
*The only reason why the borrower was not able to keep up with the payments was because of the increased interest rates;
*The mortgage is a subprime loan or a bad credit loan- the borrower should
have a FICO score less than 660 to be considered as bad credit rating;
*The borrower should not be late with his submitting payments for more than 60 days;
You may contact 1-888-995-HOPE if you wish to find out if you are eligible. This is a non-profit organization which represents various leaders, credit counseling agencies and investors in the US. Just in case you are not eligible for a mortgage rate freeze, the organization can help you find other options to assist you with your home loan.
by: Liz RobertsAbout the Author:Liz Roberts is a freelance writer and loan consultant. The website BadCreditResources.com offers resources that specialize in providing bad credit loans and credit cards for bad credit.