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Q: I purchased a home two years ago and my mortgage payment started out at $397 a month. Now it is $567 a month. I found a lender to refinance my 10% interest rate down to 6% but they insist on giving me another adjustable rate mortgage instead of one with a fixed rate. I cannot afford for the mortgage to keep changing. What can I do to get a fixed-rate mortgage?
— R. Favors, Great Lakes, IL
A: First, I want to commend you for not accepting the adjustable rate mortgage the lender tried to force on you — you should never agree to loan terms that do not suit your needs.
You should always be prepared to negotiate for the rate you want, which means using competition to your advantage. This will require you to aggressively shop around for a mortgage rate you can live with. Remember, fixed rate mortgages will carry higher interest rates than adjustable rate mortgages.
If your bank can’t give you a satisfactory rate, turn to the Internet. Check Bankrate.com (www.bankrate.com) to find the average loan rates in your part of the country. Then visit online mortgage lenders such as Lending Tree (www.lendingtree.com) and E-loan (www.eloan.com), which offer competitive rates on mortgages. You can then challenge other lenders to beat the Website offers. Defer any credit checks until you find an offer you like because multiple credit checks from Website lending partners will hurt your credit rating.