I suppose it's possible that there are exceptions to this, but it's highly doubtful. I also doubt that your agent knows anything about how an option ARM was structured so take that advice with a grain of salt.
Note that most lenders are doing modifications for borrowers with neg-am mortgages. Wells Fargo in particular lost a court ruling in California where they are to modify their portfolio of Wacvovia (formerly World Savings) pick-a-pay loans. You should definitely speak with your lender and it won't hurt to ask about the recast, but check your note first to see what the ramifications of that will be. I think you may find it to be a bad idea.
Those below who say to contact your lender are correct. But if you're not confident doing that, or would have trouble really understanding the answers you might get, give me a call. I'd be happy to walk you through it and interpret the options.
When banks initiate option arms or any other type of "creative financing" they do it based on risk/benefit analysis for the bank (not the borrower) and earnings projections. Also, look at your paperwork, chances are when your option arm resets it does so for a 6 month or 1 year period - not for the balance of the loan. Your better choice would be asking the bank to do a no-doc or low-doc refinance. Many banks are aggressively pursuing these (Chase for one). Being 5 years into your loan already, look at the possibility of refinancing into a shorter term loan (I know Chase is doing 25 year loans for the current clients who are refinancing into fixed rate products). Currently 15 year loans are in the mid-3s and could save you a lot of money if you plan to keep the house for 15 or more years. Of course, if you have equity & verifiable income, you can always shop around for the best rates.
So check with your bank right away and see what they are offering. You might be surprised. Good Luck andn Dare to Dream.
Shel-lee Davis, QSCÂ®
Certified Distressed Property Expert â€“ CDPEÂ®
Short Sale & Foreclosure Resource â€“ SFRÂ®
Certified HAFA Specialist â€“ CHSÂ®
Your Real Estate Consultant for Life
RE/MAX Palos Verdes Realty
I know you're enjoying the lower rate from that 7yr arm, but what do you see in your crystal ball for where interest rates will be when your 7yrs is up in 2yrs & you need to get into a fixed loan?
You should really be thinking about that NOW & try to get yourself into a fixed term loan while rates are super low.
Realtor Since 1996
Main Street Realtors