Conf ARM LIBOR 10/1 IO 5-2-5? Can this be re-financed at any time of my choosing during the life of the loan?

Asked by Richard, San Jose, CA Fri Oct 7, 2011

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Dan Tabit, Agent, Issaquah, WA
Fri Oct 7, 2011
Generally, yes. As Claudia said, you'll want to review any prepayment rider and ask the loan officer you are working with. Most conforming loans don't have a prepayment penalty, but it never hurts to be certain.
If you know with a great deal of certainty that you will not be in the home long after the rate becomes adjustable, these loans can be attractive. I'm seeing 5/1's with rates in the middle 2% range with a nice rebate. But, as others have said, if you are thinking there is a chance you'll be in the home longer it's not hard to find something in the 4% and below range and you can save the cost of the refinance.
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Norman Aless…, Agent, San Jose, CA
Sat Oct 8, 2011
I agree with the others, check to make sure there is NO prepayment penalty then refinance NOW. I believe Charles is correct, do it now while the interest rates are this low. There is a HUGE amount of refinancing going on right now, many smart home owners are doing it.
If you need a good loan broker or Bank loan officer let me know.
At your service,
DRE# 01397256
1 vote
Ruth and Per…, Agent, Los Gatos, CA
Tue Oct 11, 2011
Hi Richard

Check your loan papers or with Title Company where you signed off on the loan
if there is a pre payment penalty.

If so then determine the cost , benefit analysis.

But if no pre payment penalty prudent to Refi.

Check out

0 votes
charles butt…, Agent, san jose, CA
Fri Oct 7, 2011
Good Evening Richard:

Right now interest rates on 30 year fixed rate loans are the lowest that we have seen in over 50 years. Those interest rates will go up in the near future. They will probably go up dramatically and very rapidly.

Now is the time to lock in a 30 year fixed rate loan. That way no matter what interest rates do, you are guaranteed that low rate for the life of the loan.

Remember, back in the late 1970s and early 1980s Mortgage Interest rates jumped to 18% and more for the best borrowers with the best credit.

When interest rates jump up, if you are not able to refinance, you will lose your home to foreclosure.

That will probably happen again in the not too distant future.

if you are caught with an adjustable rate loan it will be too late to refinance when that happens.

Also if your income has dropped even temporarily you will not be able to refinance that adjustable rate loan because your income may not be high enough.

Or if something happens to harm your credit score, even if it is an error that may prevent you from refinancing when you need to refinance.

Lock in a 30 year fixed interest rate loan now!!!

Thank you
Charles Butterfield
Real Estate Broker/REALTOR
American Realty
Cell Phone: (408)509-6218
Fax: (408)269-3597
Email Address:
0 votes
, ,
Fri Oct 7, 2011
Richard: There will be a specific Prepayment Penalty Rider attached to your Note spelling out the terms of the prepayment penalty, if any.
The Note, itself, will also clarify how much principal you may payoff at any time with or without penalties.
Your loan agent who placed you into this loan should have pointed out the fact that the loan did or did not have a prepayment penalty.
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Andrea Wince…, Agent, Milpitas, CA
Fri Oct 7, 2011
Check the loan terms to see if there is a prepayment penalty.
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