BLOWNMORTGAGE.COM LENDER HOTLINE: 888-581-5008 With all of the subprime guideline changes and prime mortgage rates at a low point, here are 5 Things You Should do Right Now(TM) if you have a mortgage: 1. Figure out what type of loan you have: Do you have an adjustable rate mortgage (ARM), interest-only loan, pay-option (negative amortization) or second mortgage? If you have an ARM when does the rate adjust (most ARMs are either 2,3,5 years after you got the loan) and what will it adjust to? You can take a look at the index (it’s in the note and usually called the LIBOR or MTA) online from a variety of sources. This will give you an idea of what your rate will jump to when it adjusts. Verify what it will do to your monthly payment by using an online mortgage calculator. If you have one of these types of mortgages read the loan documents to get familiar with your obligations under the loan. It is tedious, but well worth it to ensure your understanding. If it concerns you talk to someone to trust to explore your options. 2. Find out if you have a pre-payment penalty on your loan. This will let you know how much longer you’ll be locked in to your loan and will provide you a better picture of what options are available to you. There are very few circumstances where paying a pre-payment penalty makes sense (though I believe that there are some), and this will let you know what time frame you should be looking at for refinancing, especially if your loan falls in to one of the categories in #1. 3. Get a copy of your credit report for free. And don’t get it from one of those free, but not really free, sites. The credit bureaus – by law – have to give you a copy of your report once a year absolutely free. Cleaning up your credit and making sure the bureaus have accurate information is a whole series of articles on its own, but as they say "knowing is half the battle". Once you know your credit score you’ll have a much better grasp of what your options are if you choose to refinance. 4. Figure out how much of your monthly income is dedicated to (1) your mortgage payment and (2) all of your bills including your mortgage payment. For example if you make $5,000/month and your mortgage payment is $1,000 and you have another $1,000 in bills your 2nd ratio (2) is 40% ($2,000/$5,000). If number two (2) is more than 50% you’re exposed to problems if your mortgage payment adjusts to a higher rate. In fact, if it is near 50% you’re going to feel significant pain if your mortgage readjusts.

1. 5 THINGS
YOU SHOULD DO
RIGHT NOW IF
YOU HAVE A
MORTGAGE
BLOWNMORTGAGE.COM
LENDER HOTLINE: 888-581-5008
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2. With all of the subprime guideline
changes and prime mortgage rates
at a low point, here are 5 Things You
Should do Right Now(TM) if you
have a mortgage:
BLOWNMORTGAGE.COM
LENDER HOTLINE: 888-581-5008

3. Do you have an adjustable rate mortgage (ARM), interest-only loan,
pay-option (negative amortization) or second mortgage?
1. FIGURE OUT WHAT TYPE OF LOAN YOU HAVE:
If you have an ARM when does the rate adjust (most ARMs are either
2,3,5 years after you got the loan) and what will it adjust to? You can
take a look at the index (it’s in the note and usually called the LIBOR or
MTA) online from a variety of sources. This will give you an idea of
what your rate will jump to when it adjusts.
If you have one of these types of mortgages read the loan documents to
get familiar with your obligations under the loan. It is tedious, but well
worth it to ensure your understanding. If it concerns you talk to
someone to trust to explore your options.
BLOWNMORTGAGE.COM
LENDER HOTLINE: 888-581-5008

4. This will let you know how much longer you’ll be locked in to
your loan and will provide you a better picture of what options
are available to you. There are very few circumstances where
paying a pre-payment penalty makes sense (though I believe
that there are some), and this will let you know what time
frame you should be looking at for refinancing, especially if
your loan falls in to one of the categories in #1.
2. FIND OUT IF YOU HAVE A PRE-PAYMENT PENALTY ON
YOUR LOAN.
BLOWNMORTGAGE.COM
LENDER HOTLINE: 888-581-5008

5. And don’t get it from one of those free, but not really
free sites. The credit bureaus – by law – have to give
you a copy of your report once a year absolutely free.
Cleaning up your credit and making sure the bureaus
have accurate information is a whole series of articles
on its own, but as they say "knowing is half the battle".
Once you know your credit score you’ll have a much
better grasp of what your options are if you choose to
refinance.
3. Get a copy of your credit report for free.
BLOWNMORTGAGE.COM
LENDER HOTLINE: 888-581-5008

6. (1) Your mortgage payment
(2) All of your bills including your mortgage payment.
For example if you make $5,000/month and your mortgage
payment is $1,000 and you have another $1,000 in bills your
2nd ratio (2) is 40% ($2,000/$5,000). If number two (2) is more
than 50% you’re exposed to problems if your mortgage
payment adjusts to a higher rate. In fact, if it is near 50% you’re
going to feel significant pain if your mortgage readjusts.
4. Figure out how much of your monthly income is
dedicated to:
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7. Using the mortgage calculator above figure out how
much you may have to pay if you are unable to
refinance your mortgage and it adjusts to a higher
rate. Once you are aware of what your new
payment will be, look at #4 again with the new
numbers. Add up all of your expenses with the new
mortgage payment and see where you net out each
month. If that number scares you, talk to someone
you trust about your options in keeping that from
happening.
5. Figure out the worst case scenario for your mortgage
payment.
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LENDER HOTLINE: 888-581-5008

8. Even if your mortgage is fixed for more than a year or
two, it still behooves you to plan and prepare
accordingly. If you have a sound plan regarding the
management of your mortgage you’ll be much better
prepared to manage your debt better and won’t be
caught off guard by any changes in your mortgage
payment. Everything works better with planning and
your mortgage is no different.
BLOWNMORTGAGE.COM
LENDER HOTLINE: 888-581-5008

9. T O L E A R N M O R E
BLOWNMORTGAGE.COM
LENDER HOTLINE: 888-581-5008
C L IC K HE R E
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10. Justin McHood is Americas Mortgage
Commentator and has been providing
Mortgage commentary for
over 10 years.
INFORMATION PROVIDED BY:
Justin McHood
MORTGAGE COMMENTATOR
Information Originally Published:March 17, 2007
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11. LEARN MORE ABOUT
MORTGAGE COMMENTATOR:
MORTGAGECOMMENTATOR.COM
FACEBOOK.COM/MORTGAGECOMMENTATOR
@MORTGAGECOM_
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