How to Get Out of Adjustable Rates

Adjustable rates are common in mortgage loans with some people lured by low teaser rates that adjust in a few years - often at a much higher rate. But changing the terms of your loan allows you to get out of adjustable rates. Some people struggling with adjustable-rate mortgages are forced into foreclosure because they cannot afford the new payment after the rate adjustment. That's a key reason why the Federal Trade Commission recommends fixed-rate loans with steady payments throughout the life of the loan.

Instructions

1

Determine how much your house is worth if you are seeking to get out of adjustable rates on a mortgage. Some houses sharply decline in value during a housing slump or recession, and it is possible that your home is worth less than the balance on the mortgage. That could make it difficult or impossible to get out of the adjustable rate mortgage by seeking a new loan. Have a real-estate appraiser offer an estimate of your property's worth.

2

Meet with a housing counselor certified by the U.S. Department of Housing and Urban Development. Find a counselor in your area by calling a public library or a local charity for a referral. Tell the counselor about your issues with adjustable rates, and your interest in converting to a fixed rate. The counselors are experts in housing-related credit issues and can contact creditors on your behalf.

3

Refinance your adjustable rate into a fixed-rate mortgage with the help of the credit counselor. The counselor can recommend local lenders who may lend to you based on credit rating and other factors.

4

Get out of adjustable rates with a loan modification plan with your current lender if refinancing elsewhere is not an option. Loan modification allows your lender to change every term in your loan agreement, including switching from adjustable to fixed rate, though it's usually available only to people who are facing foreclosure. In some situations, people who more owe than their house is worth are approved for loan modification as an alternative to foreclosure. Credit counselors will help negotiate loan modification - and end the adjustable rates through a three-way call with your lender and follow up meetings.