Brent D. Miller
Home Mortgage Consultant
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Convert to a Fixed Rate

Is it time to refinance?

Find out how to decide if refinancing your adjustable-rate mortgage will meet your needs.

If you have an adjustable rate mortgage (ARM) loan that recently adjusted or is about to adjust, you may want to explore converting, or refinancing, to a fixed rate mortgage.

How does an adjustable rate mortgage (ARM) work?Show Details

Like many homebuyers, you may have been attracted to the low initial interest rate of an adjustable-rate mortgage (ARM). While adjustable-rate mortgages have lower initial interest rates than fixed-rate mortgages, the lower interest rate is only for a set period of time.

Is refinancing from an ARM to a fixed–rate mortgage right for you:
  • An ARM or variable interest rate can rise based on market or index rates while the interest rate of a fixed-rate mortgage does not change during the length of the loan term.
  • ARMs have an initial fixed- rate period, when rates and monthly payments are lower than fixed-rate loans.
  • When the fixed-rate period ends, the monthly payment adjusts based on the type of loan you have. Your interest rate (and monthly payment) will rise or fall based on the market rate or index.

Refinancing may be an option for you to consider if your loan is adjusting to an interest rate that's higher than the current market rates.

Refinancing out of an ARM to a fixed-rate mortgage may provide:
  • Stability. You may gain protection from rising interest rates and future payment increases. Fixed-rate loans provide the security of predictable monthly payments.
  • Loan options. Wells Fargo offers a variety of fixed-rate loan home financing options. We make the financing process streamlined and convenient.

What should I consider before refinancing my ARM to a fixed rate mortgage? Show Details

Gears iconDoes refinancing fit my situation?

Determine if you'll save enough to recover closing costs.
Your home may be the largest asset you have. It is important to consider the following before you decide to refinance:

What are the estimated costs?
When you refinance, you may pay:
  • An origination charge , which may include fees such as application or processing.
  • Discount points to lower your interest rate further. (May be tax deductible. Consult your tax advisor regarding deductibility).
  • Other settlement charges such as appraisal, credit report, title search, and title insurance fees.

If you're an existing Wells Fargo Home Mortgage customer, you may be eligible for a streamlined refinance with no closing costs, application, or appraisal fees.1
Find out more about our streamlined refinance.
lightbulbYou may be eligible for a reduced reissue or refinance rate on your title insurance if the property's current policy was issued recently. Ask your title or closing agent if you qualify.

Does my loan have prepayment penalties?
  • If there's a penalty for early payment of your current loan, this will add to the refinance cost.
  • Be sure to ask your lender if you will have a prepayment penalty if your loan is paid off early.

How long will I stay in the home?
  • If you plan on staying in your current home for an extended period of time, and the interest rates are 1/2% to 5/8% lower than your current rate, refinancing may be the right choice for you.

How can I determine the break-even point?

What loan term will you refinance into?
  • If you have been making payments for a number of years and refinance back to the same loan term on the new mortgage, you may pay more additional interest than you would save by lowering your monthly payment.
  • Instead, consider refinancing to a term that matches or is less than the number of years you have left on your mortgage. When you shorten the term on your mortgage, you are likely to reduce the amount of interest you would pay.

Are there any additional considerations?
  • You are starting over. Refinancing replaces your existing loan with a new one.
  • You could extend your mortgage loan term. If you've paid three years of your current loan and refinance your new loan to the same term, you will be starting over.
  • Expect to pay less principal at first. Consider that you can potentially build little equity in your home during the early years of a new loan.

What financing basics should I understand?Show Details

If you obtain a mortgage to convert to a fixed rate you will repay more than you borrowed. In addition to your interest rate, term and loan amount, how much you repay is determined by several factors. Here are the components you need to know:
Interest Rate
  • The interest rate is the percentage of your loan amount we charge you to borrow money.
  • Interest rates are based on current market conditions, your credit score, down payment, and the type of mortgage you choose.
Discount points
  • One point equals 1% of your mortgage amount.
  • If you qualify, you may be able to pay one or more points to lower your interest rate. A lower interest rate means lower monthly mortgage payments.
  • You may be able to finance points as part of your mortgage amount.
  • Points are usually tax deductible. (Consult a tax advisor on the deductibility of discount points.)
Origination charge
  • The amount that includes all charges (other than discount points) that all loan originators (lenders and brokers) involved will receive for originating the loan.
  • This charge covers items including fees, document preparation, and underwriting costs, and other expenses.
  • If you qualify, you may be able to finance the origination charge as part of your mortgage amount.
Loan term
  • Your loan term is the amount of time you have to pay off your mortgage balance.
  • Shorter loan terms typically mean higher monthly mortgage payments, but often have lower interest rates. And if you pay off your mortgage balance within a shorter term, you may pay less in total interest than with a longer-term mortgage.
Remember that interest rates only tell part of the story. The total cost of a mortgage is reflected by the interest rate, discount points, and origination charges. This total cost is known as the annual percentage rate (APR), which is typically higher than the interest rate. The APR enables you to compare mortgages of the same dollar amount by considering their total annual cost.
What is PITI? PITI stands for the four elements that make up most mortgage payments: Principal, Interest, Taxes, and Insurance.
Your monthly mortgage payment is typically made up of four parts:
  • Principal is the amount of money you borrowed.
  • Interest is the cost of borrowing the money.
  • Taxes are the property taxes charged by your local government. Typically we collect a portion of these taxes in every mortgage payment and hold the funds in an escrow account for tax payments made on your behalf as they become due.
  • Insurance refers to homeowners or hazard insurance that provides protection against losses from property damage due to wind, fire or other risks. Like taxes, insurance costs are typically collected and paid from an escrow account.

View loan options now.

Depending upon your property location, property type and loan amount, you may incur other monthly or annual expenses such as mortgage insurance, flood insurance, and homeowners association fees.

What should I know about refinancing my current ARM loan?Show Details

An adjustable rate mortgage can be the right option depending on your situation, but you must keep in mind that the interest changes at a predetermined time and may change every year.
Depending on your situation, you may want to explore fixed-rate refinance options:

What criteria are used to assess my application?Show Details

When your application is complete, we review the following four components:
  • Do you have a reliable, continuing source of income to make monthly payments?
  • Income can come from primary, second, and part-time jobs, as well as overtime, bonuses, and commissions.
  • You may use other sources of income if you want them considered for payment – including retirement or veteran's benefits, disability payments, alimony, child support, and rental or investment income – provided they can be verified as stable, reliable, and likely to continue for at least three years.

Learn more about establishing and improving your credit
Current debts and credit history:
  • Do you pay your bills, loans, credit cards, and other debts on time?
  • We examine your payment habits before deciding to loan you money.
  • Your credit history and credit score are also examined prior to deciding to loan you money.
  • It's a good idea to check your credit history and correct any problems before applying.

Assets and available funds:
  • Do you have enough funds for closing costs?
  • You may use funds from a savings account, certificate of deposit (CD), investments, and retirement fund.
  • In some cases, you may be able to use a gift from a relative, friend, employer, or not-for profit organization.
  • In many cases you will also have to demonstrate that you have additional funds in your accounts to cover several months of mortgage, tax, and insurance payments.

The property:
  • What is the market value of the property?
  • We will order a property appraisal to make sure your property's value meets our underwriting requirements.

Responsible lending guidelines

We approve applications where we believe the borrower has the ability to repay the loan or line of credit according to its terms. We use two ratio-based guidelines to evaluate your ability to repay.
What is debt-to-income ratio? Debt-to-income ratio is the percentage of your monthly income that is spent on monthly debt payments.
What is housing-to-income ratio? Housing-to-income ratio is the percentage of your monthly income that is spent on monthly housing payments.
Debt-to-income ratio:
  • Your expected monthly mortgage payment (principal, interest, taxes, and insurance) plus your other monthly debt obligations to your gross (pre-tax) monthly income are compared.
  • Mortgage program guidelines vary, but a good rule of thumb is to keep your total debt level at or below 36% of your gross monthly income.
Housing-expense-to-income ratio:
  • We also compare just your expected monthly mortgage payment (including taxes and insurance) to your gross monthly income.
  • Mortgage program guidelines vary, but a good rule of thumb is to keep your housing expense level at or below 28%.
Even if you fall within the 28%/36% rules of thumb, make certain that you feel comfortable making your monthly mortgage, insurance and tax payments and the payments on all your other monthly obligations. Homes have other costs—such as utilities, maintenance and repairs—that may not exist if you rent.

What can I do if I am having trouble making my payments?Show Details

If you are facing payment challenges, don't wait another day. We're here to help you understand your options.
MortgageHome Equity
If you're struggling to make your monthly payments, or think you may have difficulty making payments in the future, find out about possible options that may allow you to keep your home in our Get Help with Payment Challenges section.
  • Getting started online
  • Call 1-800-678-7986
    Monday – Friday, 8 am – 9 pm, Central Time
    Saturday, 9 am – 2 pm, Central Time
The Wells Fargo Home Equity Assist program was created to help home equity customers through difficult times. If you're having financial difficulties, you may be eligible for a reduced monthly payment or gain more time to repay your loan.
  • Call 1-877-628-9584 today for more information.
  • If you don't have time to call now, you can request an appointment for a Home Equity Specialist to call you at a time that is convenient for you.
Brent D. Miller
Home Mortgage Consultant
NMLSR ID 404017
Office: 1-425-468-8638
Fax: 1-866-746-5890
Toll Free: 1-800-643-0528 Ext.8638
Contact Us
10900 NE 8TH ST Suite 1430
Bellevue, WA 98004


A discount point is 1% of your loan amount.

Origination Charge

One amount that includes all charges (other than discount points) that all loan originators (lenders and brokers) involved in the transaction will receive for originating the loan. This includes any application, processing, underwriting fees, and payments from the lender to the broker for origination.

Title Insurance

An insurance policy that protects a lender and/or homebuyer (only if homebuyer purchases a separate policy, called owner's coverage) against any loss resulting from a title error or dispute. On a refinance, if the property has had a recent title insurance policy, a homeowner may sometimes be eligible for a reduced rate on the title insurance (also known as the reissue or refinance rate).


Private mortgage insurance (PMI) is insurance written by a private company that protects the lender from losses in the event the borrower defaults on the mortgage. Borrowers are required to pay the premium for private mortgage insurance. Private mortgage insurance limits a lender's exposure to financial loss resulting from loan default. If you make a down payment of less than 20%, even if you have a good credit profile, lenders generally require private mortgage insurance.

Origination charge

One amount that includes all charges (other than discount points) that all loan originators (lenders and brokers) involved in the transaction will receive for originating the loan. This includes any application, processing, underwriting fees, and payments from the lender to the broker for origination.

Index rates

Index rates are used to calculate rates on an adjustable rate mortgage. They can be tied to a one-year treasury or the London Inter-Bank Offered Rate (LIBOR), depending on the loan product chosen.

If you are a servicemember on active duty, prior to seeking a refinance of your existing mortgage loan, please consult with your legal advisor regarding the loss of any benefits you are entitled to under the Servicemembers Civil Relief Act or applicable state law.
1 Closing documents must be witnessed and notarized. You may need to pay a minimal fee to a notary public.
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