Has your phone started to ring yet? Maybe there are more than a few postcards stuffing your mailbox these days. Or perhaps your loan officer flat out just calls you on the phone and forgoes all the marketing stuff. Why all the chatter? Why, to refinance out of your adjustable rate mortgage, that's why. And of course, if you do have an adjustable, you should consider looking at getting out of it.

You remember that loan, don't you? Wasn't it just a couple of years ago when interest rates were nearly sub-zero and you and your very smart loan officer thought it would be a great time to pull out a little equity, maybe pay off some credit cards while you're at it and drop your total monthly payments by a gazillion dollars each month?

It made sense at the time didn't it? Or at least that was the logic you were led to believe. Your loan officer convinced you to refinance your old note into a new one. Oh, and of course let's make a little money while we're at it. Loan officers have to eat too, right? There were so many reasons to refinance into an adjustable rate mortgage that it had to make sense.

"Refinance now, drop your monthly payments and pay off old, higher rate debt! Even if rates do go up you're still way ahead because of this great low starting rate. Hey, you'll save thousands!" said your loan officer.

But now that fully indexed rates are near 7.50 percent and at least a full percentage point above current fixed rate fare, and going higher, then it makes sense to get into a lower fixed rate doesn't it?

If your loan officer played her cards right, you're thinking right now about refinancing into a fixed rate loan. She ran the numbers, waived some of her fees (what a trooper) and showed you that, yes, it's probably the prudent thing to do now and lock in those fixed rates. Yes, prudence. Can't get enough of that prudence, can we? Especially when it comes to your mortgage, right?

The mortgage industry has predicted a mortgage slowdown for 2006. But I'm not so sure they counted on the creativity of the average mortgage loan originator.

Loan officers don't get paid unless they close a loan. If things are slowing down a bit, they look for ways to find new deals, and those new deals are often other ways they can refinance your loan.

The first choice is usually a cash-out refinance. Pay off some credit card bills, pay off your mortgage and the new monthly payments are almost always lower than your mortgage and credit card payments combined. The math usually works.

Or maybe your loan officer finds that you have an equity line from your bank or a second mortgage with a higher, probably adjustable, mortgage rate. Guess what? You're probably better off refinancing those two notes into a fixed loan with one lower payment … after all, fixed rates are the prudent choice these days.

You mean you have an ARM! Why, you'd better refinance into a fixed rate now while the rates are still good.

Wasn't it the loan officer who told you it was a good idea to refinance into an adjustable to get the lower payment and now they're wanting to get you into a more conservative fixed rate loan?

There's nothing wrong with any of that. It's America, right? Everyone is supposed to have an opportunity to make money. Just realize that suddenly when everyone you know is a loan officer and they're telling you (again) that it's time to refinance, just step back and take a breath. It's the prudent thing to do.

Published: March 3, 2006

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, a veteran Mortgage Banker, successful Real Estate Consultant and author of Your Guide to VA Loans, Mortgages 101: Quick Answers to Over 250 Critical Questions About Your Home Loan, Who Says You Can't Buy a Home!, and Mortgage Confidential: What You Need to Know That Your Lender Won't Tell You, is a former columnist and Contributing Editor with San Diego-based Mortgage Originator Magazine. Reed is President of CD Reed Mortgage Bankers, Austin, TX and is a Past President of the Austin Mortgage Bankers Association.