Financing in Westfield>Question Details

Gp, Other/Just Looking in 07090

Refi with an ARM.

Asked by Gp, 07090 Tue Jul 20, 2010

Any opinions on the 5/1 ARMs as a refi. We're in a 30Fixed at 6% on a Jumbo. We've been approved for a 3.99 5/1. We can also get a 30yr fixed at 5.125 at the same bank. My thought is that even if we hit the caps on the 5/1 in years 6-9 we'll still break even based on how much we save during the first 5 years. Seems like a reasonable bet. Anything I am missing.

Help the community by answering this question:


Thats my understanding as well, 30 year fixed rates are around 4.50 right now, well today anyway. But one thing your forgetting is the closing costs when you refi out of the arm, and also will you be able to refi out of the arm or will the property not appraise high enough for any lender to touch it. Property values may decline steadily for the next ten years which could cause major problems for you down the road since during the first ten years of a mortgage most of the payment is going to interest and not the principle of the loan. You could potentially find yourself unable to refi out of an arm when interest rates are on the rise and be under water in your home. The best bat is to take the 30 mortgage at the historically low interest rates they are at today and be VERY happy with that. Gambling with the arm will never be worth it, mark my words.
Web Reference:
0 votes Thank Flag Link Wed Jul 21, 2010

Based on current interest rates, and depending on your refi amount, whether or not its a rate and term or cash refi, the credit score, closing costs, and whether or not they're rolling your closing cost into the loan amount or rate, you should possibly be getting a much lower interest rate than 5.125 for a 30 year fixed. Right now, and again depending on your specific scenario and situation, you should be looking at a 30 yr fix at a 4.5% rate. This rate should also still possibly allow your lender to roll their and title costs into the rate and not the loan amount. Maybe you should shop around.
0 votes Thank Flag Link Tue Jul 20, 2010
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2015 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer