Steps to Take If you Wish to Refinance An Adjustable Rate Florida Mortgage

If you have an adjustable rate Florida mortgage loan - where your monthly payments are about to ratchet up steeply or you are dangerously close to having a negatively amortized loan - the low rates on the 30-year fixed-rate loans this month offer you a window of opportunity to lock in a low rate long term.

There may be some payment shock if you’ve been in an ARM, “but it will be less than if you wait,” said Bob Visini, Loan Performance’s vice president of marketing.

Here are five cost-effective steps that Wachovia mortgage banking executive Blair Glenn and George Hanzimanolis, president-elect of the National Association of Mortgage Brokers, recommend if you choose a Florida home loan refinance:

1. Ask your original lender if you may modify (or recharacterize) your loan into a fixed-rate mortgage. With fees that range from $250 to $500, this process is less costly and less intensive than a full refinancing - which typically runs between 0.5 percent to 2 percent of the loan amount.

But a modification may prove more expensive in the long run if the fixed rate your lender offers is more than three-quarters of a point above the going rate you’d get on a regular refi. So make sure you shop around for the best Florida mortgage rates and closing costs.

2. Consider whether it makes sense to buy points. Points are money you pay up-front to lower the fixed rate on your mortgage. If you think rates will fall and you’ll refi again soon, it may not make sense to buy points. But if you think rates are as low as they’re going to get for awhile, it might save you a lot of money long term to lower your rate today.

3. Ask to pay the “reissue” rate on your title insurance in a refi. It costs about 20 percent less than the standard title rate on new Florida mortgages.

4. Opt for a full appraisal, even if your lender only requires a “drive-by appraisal.” A drive-by means an appraiser doesn’t even inspect the home in person. A full appraisal costs more (about $300 vs. $150), but your home’s value will be more accurately assessed.

Because a sale may be contingent on your home’s assessed value and it determines how much you can borrow against your home and how much you’ll pay in property taxes, accuracy is important.

5. Don’t pay an application fee. A lot of companies are waiving that fee, so you shouldn’t be subject to it.