Get the FAQs on mortgage resets
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What should I do before my rate resets?

Forewarned is forearmed, especially where an impending mortgage reset it concerned. Grab your mortgage and sit down with our easy-to-use mortgage reset calculator to figure exactly what your new reset mortgage payment will be.

If your change period is still a ways off, you can track your ARM's index on Bankrate as well. That way, you'll be better able to determine your best move before time limits your options.

What if I have a rate reset that is more than one year away?

With that kind of lead time, you have a number of options. You may decide to begin saving now to help cushion the blow of those stepped-up payments. If the monthly nut will still be too high, you might consider refinancing. You may take in a roommate to help with the heftier note.

Another option may be to sell now, before the change date gets uncomfortably close. We can help you calculate how much house you can afford.

If your local housing market makes the prospect of selling unappealing, you might consider co-ownership with a parent or other willing investor, especially if there is a good likelihood that your income may one day enable you to buy them out.

What should I do if my rate has already reset?

That depends. If you can afford the higher rate, you may choose to simply continue making the higher monthly payments. Or you might find it more comfortable to refinance into a fixed-rate mortgage, especially if your credit is good and you plan on staying put.

Despite the housing slowdown, mortgage rates remain attractively below the 8 percent average for the past 20 years and lenders are eager to write, the subprime market excepting.

Check out up-to-date 15- and 30-year fixed-rate mortgages.

What do I do if I can't afford my new payment?

Several avenues may be open to you, depending on your situation. The first step is to call your mortgage servicer's collections department. Here's how to prepare for that call.

If your shortfall is temporary, they may be willing to allow you to make partial payments until you can bring your account current. If your shortfall is due to a natural disaster or job loss, they may even grant you forbearance for three to six months, during which no payments are required, if you can convince them that you will be able to resume full payments and bring your account current after that period. The effect of these options on your credit rating is minimal to moderate.

From there, your options narrow, and you'll take them up with the servicer's loss mitigation department. To preserve their investment, they may be willing to modify the terms of your loan, perhaps by removing some of the fees or converting it from an ARM to a fixed-rate loan.

By the time foreclosure appears imminent, your options narrow further. The lender may offer to accept from you a deed in lieu of foreclosure, enabling them to take possession and sell the house, at their expense.

They typically prefer instead to allow a "short sale," in which you sell the house for less than you owe, at your expense.

The advantage of these two options: the impact on your credit rating, while severe, won't haunt you for seven years the way a foreclosure will. When the lender forecloses, they take possession, evict you and sell the house. All you have to show for it is a devastated credit record.