February 21, 2024

Fryer And Brown

Creating Your Dream Home

Adjustable Mortgage Trouble – Cannot Refinance Rental Property ARM Loan

Have a Rental Property You Cannot Refinance?

During the last boom in real estate many people took the plunge into real estate investing in order to have an appreciating asset. Unfortunately for many of these investors used adjustable rate mortgages and other crazy loans like option ARM negative amortization loans.

Once the real estate markets and the economy did a fast turn around many of these investors found that they could no longer refinance their rental properties adjustable rate mortgage leaving them with rising payments and a property that is now making them lose money instead of make it!

Why Would an Investor Not Be Able To Refinance an ARM Home loan

The biggest problem is the fact that many properties across the country have fallen dramatically in value, some areas as much as 50{bc081577d937b036760250a838c458dd2cdabe6c805de7ee78ca03a8e3da3931}.  Factor in that most investors used 95-100{bc081577d937b036760250a838c458dd2cdabe6c805de7ee78ca03a8e3da3931} loans to buy their properties they now owe a lot more then on their loan then the house is worth.

Lending restrictions have also tightened up and many of the stated income or low documentation loans used by people to buy these homes no longer exist. That means that if they are unable to [prove their current income or do not have adequate income to fall into the right debt to income ratios banks will not lend to them

What Can an Investor Who Cannot Refinance Do

The best thing to do is to call and talk to your current mortgage holder. Many lenders are offering loan modifications to borrowers who have been good clients but may have gotten behind when their ARM adjusted. Often times they will switch your loan to a fixed rate or give you more time before your rate adjusts.