Reminder: Some Modified Mortgage Loans Will ‘Reset’
Was your mortgage loan "modified" about five years ago to make your payments more affordable? If so, you'll want to pay special attention.
Loan modification programs like the government's Home Affordable Modification Program℠ (HAMP) may have temporarily lowered your interest rate to a below-market rate (as low as 2%). However, this change was not permanent, and most modified mortgages (including HAMP loans), have interest rates that will begin to adjust after a set time period (usually five years).
For many borrowers whose loans were modified during the last recession, your rate will adjust this year or in early 2015. Your mortgage company should notify you about this change, but you can reach out to them with any questions or concerns.
If you're concerned—or anticipate challenges—with a new monthly payment, your mortgage company can help review your options. This can include continuing to pay the modified payments or refinancing to lock-in at a stable interest rate with an option like the government's Home Affordable Refinance Program (HARP).