Released on = January 10, 2006, 2:46 pm

Press Release Author = The Home Mortgage Guide

Industry = Accounting

Press Release Summary = Adjustable rate mortgage holders need to prepare for large
increases in monthly payments. Interest rates are on the rise and many home owners
who have adjustable rate mortgages will see significant increases in their
forthcoming annual adjustments.

Press Release Body = Interest rates are on the rise and homeowners who have
adjustable rate mortgages could see large increases in their forthcoming
adjustments.

The Federal Reserve Board made it clear in 2005 that they would continue to be
increasing short-term interest rates at a "measured pace." The Fed Funds Rate was
hiked several times from 1.0% to 4.25% since June 2004 in an effort to curb
inflation. Some economists believe it won\'t stop until the Fed Fund Rate hits 5.0%
or more.

Mortgage interest rates are affected indirectly by these changes. An increase in the
Fed Funds Rate has an impact on financial markets as a whole, but mortgage rates may
go up or down based on the perception investors have of current economic statistics
and their reaction to the Federal Reserve\'s after-meeting statements.

Our current market reflects the reaction of investors reading between the lines on
comments made by the Fed, and mortgage interest rates are going up. This will affect
home owners with adjustable rate mortgages (ARMs) tied to indexes that are based on
short-term interest rates. This includes the 11th District Cost of Funds, 12-Month
Treasury Average (MTA), London Inter Bank Offering Rates (LIBOR) and others.

This doesn\'t mean that everyone with an adjustable mortgage is in trouble right
away. Some indexes are more volatile than others. COFI moves slower than other
adjustable rate indexes, while the LIBOR fluctuates with more volatility. But
remember, when an ARM adjusts, the new interest rate is a sum of the borrower\'s
fixed margin plus the current rate of the index the mortgage is tied to.

Consumers who financed homes with 3 or 5 years ARM\'s, which have the beginning years
of the loan at a fixed interest rate could be especially hard hit when the fixed
term of their loan is over. Consumers who foresee paying an interest rate that is
significantly higher may want to consider refinancing to take advantage of the
stability of a fixed rate mortgage.

This is also a good time for borrowers who started out in an adjustable rate loan
due to a poor credit score to transition into a fixed rate loan if they can. Once a
track record of making mortgage payments on time and in full has been established,
this should have a positive effect on the credit score and there\'s a good chance the
borrower may now qualify for a loan with a lower interest rate.

As with any decision to refinance, it is important to take the terms of the existing
loan, the cost of the new loan, and the borrower\'s long-term needs into
consideration. A qualified mortgage professional should help weigh the options by
providing a clear assessment of available loan programs for the consumer.
____________________________________________________________________________
Paul Harden is affiliated with iLendingPRO, a Licensed Broker, CA Department of Real
Estate. Other helpful information regarding the can be found at:
http://thehomemortgageguide.com.

Contact Paul Harden for more insights into this topic. Direct line: (714) 209-7593
Email: paul@thehomemortgageguide.com

Web Site = http://thehomemortgageguide.com

Contact Details = Paul Harden||10073 Valley View St. #111||Cypress ,
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