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Refinancing an Adjustable-Rate Mortgage with O1ne Mortgage

Are you considering refinancing your adjustable-rate mortgage (ARM)? At O1ne Mortgage, we can help you navigate the process and find the best options for your needs. Call us at 213-732-3074 for any mortgage-related inquiries.

Is It Possible to Refinance an Adjustable-Rate Mortgage?

Yes, you can refinance an ARM just like any other mortgage. This option can be appealing if you want to start with a lower rate and monthly payment but are concerned about future rate increases. Refinancing can also help you lock in a fixed rate, though it may come with closing costs and potential prepayment penalties.

When to Consider Refinancing an ARM

Refinancing an ARM can be beneficial in several scenarios:

• Qualify for better rates: If your credit scores have improved or you can afford a larger down payment, you might secure a lower rate.
• Switch to a fixed-rate loan: Eliminate the risk of rate and payment increases by refinancing to a fixed-rate mortgage.
• Change your repayment term: Adjusting the term of your loan can impact your interest rate and monthly payment.
• Remove mortgage insurance: If you have at least 20% equity, you might refinance without mortgage insurance, reducing your monthly payments.

How Much Does Refinancing an ARM Cost?

Refinancing can be financially advantageous but comes with upfront costs:

• Closing costs: These can range from 2% to 5% of the loan balance. Some loans advertise no closing costs but may have higher interest rates or roll the costs into the loan amount.
• Prepayment penalties: Some ARMs have prepayment penalties, which could be costly. Review your loan terms carefully to understand these penalties.

How to Refinance an Adjustable-Rate Mortgage

Follow these steps to explore refinancing your ARM:

1. Check your credit: Your credit scores impact your mortgage eligibility and interest rates. Consider checking your FICO® Score 8 for free from Experian.
2. Calculate your target loan offer: Consider closing costs, your mortgage balance, interest rate, remaining term, and prepayment penalties to determine your target rates and terms.
3. Get prequalified or preapproved: Shop for mortgages to see if you qualify for offers in your target range. Prequalification gives a rough idea, while preapproval is more precise.
4. Review the loan offers: Examine prequalification or preapproval offers to see if refinancing makes sense. Pay attention to the fine print, including interest rate caps and prepayment penalties.
5. Submit the application: If refinancing is beneficial, complete the application with the best lender. Closing might take four to six weeks, depending on appraisal or inspection needs.
6. Make it official: Sign your new loan agreement to complete the refinancing. Your new lender will pay off your old loan, and you’ll start making payments to your new loan servicer.

Monitor Your Credit if You’re Thinking About Refinancing

Improving your credit can be crucial when refinancing. Avoid applying for other credit accounts and focus on paying down credit card balances. Track your progress with free credit report and score monitoring from Experian.

For personalized assistance with refinancing your ARM, contact O1ne Mortgage at 213-732-3074. We’re here to help you make the best financial decisions for your home.

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