Should I Refinance My Mortgage

Question: Should i refinance my mortgage at 4.75% for 15 years and pay $4000 in closing fees or go w/ a 1yr arm at 3.3%?

(Posted by: mikeyeggs on 2008-12-21 09:15:06)

My 5 yr adjustable is up March 09 and the 1 yr ARM resets Dec 20 which is going to be around 3.3 %. There are no fees incurred if I rollover to a one year ARM compared to $4000 in closing costs if I were to refinance to a 15 year note. The max the 1 yr ARM can go to next year is 2 points higher. Does the mortgage rates appear to be heading much higher over the next year? I don't think so but was wondering what everyone else is thinking.

Posted by: MSAD on 2008-12-21, 09:18:56

Lock into a fixed rate. All going back into an ARM will do is put you in the same spot you're in now...just a few years down the road when you will not be able to get 4.75 fixed.

Posted by: ranger_co_1_75 on 2008-12-21, 09:21:10

And what wil the closing cost be next year when interest rates are higher and the ARM is 5.3% and the fixed rate will be higher than that? What you save in one year will easily be eaten up when the rates start back up. Anytime you can get a fixed rate at a reasonable price, take it. ARMS are the cause of the economic melt down we are currently having. 4.75% is the lowest interest rate over 60 yrs. You should be hopping all over it.

Posted by: Danielle F on 2008-12-21, 09:23:56

With rates so low, the only long term direction is UP so I'd say an ARM is a definite no-no in this market. As for points on a fixed: work out how long it will take to break even on the costs, and how much interest you'll save over the 15 years. I just locked into 4.5% with 2.5 points - costly but break-even in 4 years, saving $80,000 over the course of the loan. Worth it to me as we plan to stay here for many years.

Posted by: David M on 2008-12-21, 09:40:53

Take the fixed rate. Rates are as about as low as they can get. We eventually come out of this recession and with all the stimulus going on by the government and all their spending, borrowing and printing money, inflation will follow and they will lead to higher interest rates.

Posted by: Kristen on 2008-12-21, 11:04:24

Do NOT do an ARM!! Haven't you been watching the news lately?