This is probably a very "dumb" question, and I should probably know the answer but I don't. I've looked around online and I can't find a straight answer.
With the economy taking this recent nose-dive, I've been trying to figure this out. We built our house last year, and have a 30 year fixed rate mortgage. I know the difference between a fixed rate and an ARM. However, I'm trying to make sure that there is *no* chance that our fixed rate will increase, even with the current economic situation.
Am I correct in thinking that we are "safe" from an increase? Our mortgage company can't come back on us and just decide to up the rate on our current mortgage, can they?

By Dawnk777 on Friday, October 3, 2008 - 06:48 pm:

I would think it would continue to be a "fixed" rate, but I'm certainly no authority on the topic. We also have a fixed-rate mortgage and so far nothing has changed for us.

By Sunny on Friday, October 3, 2008 - 09:15 pm:

Fixed rate means just that - it's fixed for the life of the loan. Your monthly payments may increase every year if the holder of the mortgage determines that you do not have enough in escrow, especially if your property, school, real estate taxes go up. The interest rate on the principal loan, though, does not change.

By Mrsheidi on Friday, October 3, 2008 - 10:44 pm:

Sunny, you're so smart. ;-) I concur and she said it much better than I could. LOL

By Dawnk777 on Friday, October 3, 2008 - 11:30 pm:

Yeah, that's true, Sunny. Our payments do go up a little bit, every year, but the interest rate stays the same. The taxes change and the insurance costs may change, though.

By Sunny on Friday, October 3, 2008 - 11:48 pm:

Ah, thanks.

By Breann on Saturday, October 4, 2008 - 12:12 am:

Thanks for the info I know that our payment will be going up about $100/month starting in January due to increased taxes. Last year when the property was assessed there was no house on it, this year there is. Not looking forward to that increase, but I guess we'll manage.

So glad we didn't go with an ARM.

By Dawnk777 on Saturday, October 4, 2008 - 01:39 am:

We initially had a 3-year ARM, for the house we currently live in. We got a lower interest rate that way. At the end of the 3-year period, we refinanced into a fixed-rate mortgage.

By Debbie on Saturday, October 4, 2008 - 09:55 am:

Ditto, Sunny. You signed a contract, so they can not raise your fixed rated.

By Reds9298 on Saturday, October 4, 2008 - 10:26 am:

Ditto Sunny. Breann-That's one reason I dislike escrow. They take more than they need to cover your taxes/insurance, and that irritates me. As a result, we don't escrow. All those people with ARM's aren't sleeping well, that's for sure.