Were I you, which of course I am not, I would keep the loan you have. However, it is an ARM - adjustable rate mortgage, not a fixed mortgage as you stated. A fixed mortgage does NOT change interest rates based on the LIBOR or anything else. With current conditions as they are, and your plans to stay in the home another 3 or 4 years, I think it makes sense not to re-finance. There is some gamble with any ARM, but with a March 2009 reset, you should be in good shape. Of course, there are NO guarantees. Good luck.