Financing in Haiku>Question Details

Bob, Other/Just Looking in Honolulu, HI

should i refinance a 5.75 fixed with 27 years to go for a 7year arm at 4.625 for a savings of about 500.00 per month no points

Asked by Bob, Honolulu, HI Thu Dec 3, 2009

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Bob another thought is to refi at the ARM but keep sending in your current payment amount. Doing simple math that would knock 42,000.00 off the principle of your loan. In reality it would be a little more because of the way interest is calculated on an ARM.
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0 votes Thank Flag Link Fri Dec 4, 2009
If you are looking at living there long term ask about getting a 30 year (or shorter term) FIXED rate mortgage.

If you are thinking of moving in a few short years stay with the long term fixed rate you now have.

I saw one mortgage broker say that after 7 years on a normal mortgage you would have paid off $12k of equity on a $100k loan.

That means if you are thinking short term you will not gain much. If you are living in the house you chose for your extreme old age consider a fixed rate refinance. Ask your mortgage lender to show you the difference in both monthly payment AND how long to break even after paying more fees for the new mortgage. You might save enough changing mortgages to justify it after 3-10 years. ONly running the complete numbers will let you know.

REMEMBER... an adjustable mortgage WILL go up. We are at record low rates now. So go fixed and be safe. Sometimes you end up staying longer than you expected in a place. A fixed rate helps you not to have your mortgage payment evict you.
0 votes Thank Flag Link Thu Dec 3, 2009
Assuming your facts are right, it depends. Where do you expect to be in the next 7 years? If you are confident you will have sold the home by then, it might make sense. You say, "no points" but that does not have universal meaning. If you mean, no discount points, than you will still be paying closing costs, i.e. title, escrow, appraisal and perhaps a 1 point origination fee among other fees.
The critical questions are; What are the costs, how fast will you recoup them and how long will you live there?
Have you comparison shopped. On the mainland rates under 5% are not uncommon for 30 year fixed loans up to 417,000, and in the low 5% range for loans up to $567,500. Terms may be different in Hawaii, but I would get a couple of Good Faith Estimates before proceeding if the rest of it makes sense.
Best of luck.
0 votes Thank Flag Link Thu Dec 3, 2009
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