Part 2 in a two-part series.

Facing the reality of interest-rate adjustments on your adjustable-rate mortgage (ARM)¹ can cause various reactions — from concern over your ability to make new payments to a desire to search for alternatives. View Part 1 of this series.

The following information can guide you through this adjustment, assisting you in evaluating your options and dealing with your concerns.

Considering Your Options

When your ARM is about to adjust, you have several choices:

Remaining with your existing loan.

A higher monthly payment may be troubling. But before you try to lower your payment by refinancing, be sure that you're considering all the costs and factors involved. Since refinancing typically involves some closing costs, in some cases it might be less costly to accept the payment change and remain with your current loan.

For example, some people select an ARM because they expect to move or refinance before the initial fixed-rate term expires. If you don't expect to be in your home much longer, compare the costs of refinancing against the monthly payments on your ARM for the amount of time you expect to be in your home.

If you want to know how long it would take to recover the costs of refinancing at a new rate, request a free break-even analysis.

And don't forget that you repay little equity in the early years of a new loan. If building equity is important to you, be sure to factor that into your decision. (Learn more about the importance of equity to your decision).

Refinancing to get a fixed-rate loan.

If you've determined that refinancing makes financial sense, you might want to consider the advantages of a fixed-rate mortgage. With a fixed-rate loan, you gain:

• Protection from rising interest rates

• The security and predictability of fixed monthly payments for the entire term of the loan
   
• Faster equity growth

The AICPA-Sponsored Home Mortgage Program, offered exclusively to AICPA members through Wells Fargo Home Mortgage, provides a variety of fixed-rate options, with longer terms offering lower monthly payments, and shorter terms providing faster equity growth and lower interest costs. The program offers a choice of loan terms; learn more about our fixed-rate loans or contact us for assistance from a home mortgage consultant.

Refinance with a new adjustable-rate mortgage.

If you think you may want to sell or refinance in a few years, selecting another ARM may be appropriate. You'll benefit from lower monthly payments during the initial fixed-rate period. Wells Fargo Home Mortgage offers a variety of adjustable-rate loans.

• Try to match the amount of time that you think you'll own your home with the ARM's initial fixed-rate period. Wells Fargo Home Mortgage offers ARMs that offer initial fixed-rate periods of three, five, seven and 10 years.

• If you're an existing Wells Fargo Home Mortgage customer, you may qualify for our streamlined online refinance program that offers lower costs, quick approval, faster processing, and radically reduced documentation requirements.

Select a refinance program that offers the advantages of both fixed- and adjustable-rate loans.

The FLEX/FIXED® program from the AICPA-Sponsored Home Mortgage Program enables you to combine the low initial rates of an adjustable-rate mortgage (ARMs) with the predictable monthly payments of a fixed-rate loan.

• You can "buy down" the start rate of your loan, as low as three percent below the established fixed-rate pricing.

• Since rate adjustments are limited to a maximum of one percent each year and three percent over the life of the loan, you can enjoy some peace of mind.

Dealing With Concerns

Your home is your most powerful financial asset. That's why the AICPA-Sponsored Home Mortgage Program offers options to help you protect the investment you've made. Regardless of your situation, the AICPA-Sponsored Home Mortgage Program is dedicated to helping you to build a more secure future through homeownership.

If You Have Questions

If you have questions about your loan, experienced mortgage consultants from the AICPA-Sponsored Home Mortgage Program and Wells Fargo Home Mortgage are available. Call 1-800-CPA-1210 for more information, or conduct a free break-even analysis online.

Learn more about refinancing strategies for when an ARM adjusts, including What’s Behind the Change? and Evaluating the Equity Effect.

^1. Rates may vary and are subject to increase after consummation. Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A. © 2007 Wells Fargo Bank, N.A . All rights reserved. #49801 7/07-10/07 Equal Housing Lender.