Profile picture for JHMN

I have a 7/1 arm with 2 years to go. Should I go ahead and tackle a refinance?

Looking to go with 15, 20 or 30 year.  Possibly in the house for 4-5 more years.
  • March 28 2009 - Woodbury
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Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.

 
 

Answers (27)

Chris -

Maybe it was a genius idea?  

OP claims in March 09 his ARM will adjust in 2 years.   Now Phil is here to help right before the actual adjustment occurs!

Of course, the SPAM isn't called for, so it looks like a rare thumb/flag post to me.

  • January 20 2011
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Profile picture for Chris Corica
Really Phil? You're spamming threads from 09' to drum up business. Good luck with that.
  • January 20 2011
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In my opinion refinancing now while rates are very low might be a smart move.  Rates over the next two years could much higher and they have been rising over the last 60 days.  If I was you I would not chance it becuase if values drop further it will erode your equity position that you may need in order to refinance.   I promise you great service and I have 20 plus year banking experience.  Please visit my website at [contact info removed by moderator due to self-promotion] to read the many positive testimonials from my past customers.   
  • January 20 2011
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We also don't know what the rate will adjust to and by the time we do it will be too late to lock into a low fixed rate mortgage!

That is the dilema...If you knew what rates would be it would be easy to make the decision but we don't and we won't until it's too late...Unless you have an in with Doc Brown and the flux capacitor!
  • March 31 2009
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Profile picture for prfstrkr
i am saying "Do not refinance into a higher fixed rate", not "DO not refinance" ...

see my prior comments below ...

i just don't think it would be a wise move to refi into a higher fixed rate RIGHT NOW since OP still has 2 years to go ... but anyway, we don't know wut rate he is @
  • March 31 2009
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Edit Oct 2002
  • March 31 2009
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We are going to have to agree to disagree!

Rates are artificially low if the Govt. wasn't in the MBS Market and the treasury market rates would be much higher.

Since 2000 the fully indexed rate for ARMs tied to the 1 year treasury has been at or below 4.875% for all of 33 of the 109 months that have passed.  The rates dipped below 4.875 from Oct 2005-Jan of 2005 and again just recently starting in November.  The fully adjusted rate has been as high as 8.875% during that time frame.

I am by no means saying refinancing is a no brainer...simply saying that not refinancing is not as much as a no brainer as you seem to think.
  • March 31 2009
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Profile picture for prfstrkr
$3000 is not enough to cover closing costs in many US states ...

even if it is, the end result will be only $500 by your calculation in 5 years and who guarantees rates won't drop more during any period in the next 5 years? 

rates are low but definitely not low enough right now ... during 3 days in 2003 many people were able to lock in @ 3.75% 0 point for 30 years ... that's why i always laugh @ statements like "rates are at historical low ... lock now".  It's exactly the same thing like what the old homes salesmen are saying "house prices are at historical low ... buy now or u will be priced forever" ...

  • March 31 2009
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if they are in the property for the next 5 years they will/could end up paying more than $5,200 (or more) by not refinancing to save $1,500 in the next 12 months.  Take $3,000 out for the cost of the refi and they are ahead of the game by $500 and counting at the end of 5 years.  Can anyone guarantee that they will be able to sell or refi in the next 5 years?
  • March 31 2009
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Profile picture for prfstrkr
andrew, wut about the thousands of $$$ of closing costs OP has to pay to refi now? 

  • March 31 2009
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Prf,

As long as you are aware of the risjk of the rates going up then not refinancing is fine.  Keep in mind that you may get that great adjustment down to say 3.75% today and have it for the next 12 months.  On a $200,000 loan you will save you $132.19 per month over the next 12 months.  In Month 13 inflation has hit and the 3.75% rate becomes 5.75% and that $132.19 savings is quickly turned into a $108.68 cost per month.  The benefit to the lower rate will be gone in less than a year and half.  I am not saying refinancing is the right choice simply that you need to seriuosly consider it.  Rates will be higher than they are today in the next 12-24 months that is the one thing I will guarantee, how much higher who knows but no doubt they will be higher.  You can't keep printing money and avoid inflation..
  • March 31 2009
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Profile picture for prfstrkr
if it was me, i would not refi to a higher rate ... no ... no in today's market ...
  • March 31 2009
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I don't know if I would tackle it, but interest rates are low.  I think it is a great time to refinance.
  • March 31 2009
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Profile picture for CORONA NICK

IF you can, I would refi and get out of the risky ARM and totally agree with Andrew...

  • March 31 2009
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TC,

The one issue with that 3.75% rate is that when it adjusts in 1-2 years that rate will likely jump up to 5.75%.  The real question becomes are the short term gains worth it, lower payment/rate for the next year or two.  Currently 4.875% 30 year fixed is realistic.  So you may pay 1.125% more for the next year or two but you are likely to save .875% or more after the loan adjust in a year or two.

The real kicker is you won't know what the right thing to do was until you are looking back in hindsight, since then and only then will you know what he rates are and how long you are in the mortgage or home.  You have to make the decision based on what you feel is best for you.  Just don't ignore the upward risk on the rate.  It reminds me of Golf...when you hit a bad shot and are in trouble..sometimes you just have to take your medicine and punch out rather than be agressive and end up in more trouble.
  • March 31 2009
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I would suggest getting some quotes and see what the break even point would be and compare it to how long you plan on being in the home.

Good Luck!!

  • March 31 2009
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Profile picture for TCMW
  • TCMW
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There's no way to tell where rates are going to do. But odds are they'll be higher than the historic lows we're having.  If you can't afford to pay a higher rate, definitely refi.  Otherwise, it depends on the other factors.  If I had 3.75% for instance, I might hold out.  If I had 5.25, I'd almost definitely refi.
  • March 31 2009
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JHMN,

Yes, you should get out of the ARM NOW while fixed rates are at historically low levels. Your plans could change leaving you in the house beyond the 4 - 5 years currently anticipated. Clay gave you a great recommendation below. I suggest you follow through with her as she's one of the best on Zillow.

Jason,

When you throw out a rate "4.5%" and don't elaborate, the implied message is "with no points"...that's what got AA and Bob ticked. That plus the fact that these boards are for consumer advice, not soliciting. If your advice is solid, the OP can always contact you for additional info.

Imagine how these boeards would look if everyone answering a question said "hey call me" "free advice" "4.5%" "no mention of fees"... would start looking like a brothel 

  • March 30 2009
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Profile picture for natewolf

No matter who you choose, the answer is likely the same: YES.


You should be looking to refinance. Unless you think rates will be significantly lower 2 years from now than they are today, you should be looking to refinance.

  • March 29 2009
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Profile picture for Jason Frangoulis
Both of you have a good point and I told you the points on a 30 year. I can offer a 15 yr rate at 4.50% with Zero Points. If you look at the question the homeowner is also looking at 15yr mortgage. 

Down Boys Down!!! LOL, I love all the policing it keeps me on my toes. 

Have a good night Bob and Adam. 











  • March 29 2009
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Yup, I agree with AA.  If you are gonna lay out the rate, you gotta lay out everything that comes with it... otherwise, it can be seen as misleading.
  • March 29 2009
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What I am saying Jason is 4.5% and 4.5% with 1-1.5% in points are very different.  Keep in mind many read these threads and if one was not to question the 4.5% is avaiable without pointing out it is only available with paying points people may get the impression that 4.5% with out points is available and it's not!
  • March 29 2009
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Profile picture for Jason Frangoulis
Andrew, 
I appreciate your profesionalism and knowledge but it is not my way of doing business to attack other mortgage profesinoals. With that said, let me defend my position. 

1. The rates are at 4.50%. I can offer that rate paying between 1.00% to 1.50%. To be able to have that rate paying as little 1.00% to 1.50% is a pretty good deal to some and not to others. That is why I offered to do Total Cost Analysis for the homeowener which would give them all the options. A month ago that rate would have cost 4.00% (if it was even on the rate sheet) to get if you were lucky. 

2. If you are trying to say that I am not a bank then please view my profile. 

Happy Sunday and I wish you nothing but the best. 
  • March 29 2009
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Jason,

How can someone be a mortgage banker when they don't work for a bank?

4.5% current rate...BS..only way you are getting to 4.5% is buying down the rate! If that is what you meant say it, don't make things seem better than they really are!

Rates 2 years from know will likely be much higher than they are today.  I personally think anyone that is in an ARM that will be adjusting and intends to remain in the home for more than 2 years will regret not taking advantage of the current rate enviornment.  ARMs are great right now as they are adjusting down...that will not continue to be the case!

  • March 29 2009
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Profile picture for Jason Frangoulis
With the current rates at 4.50%, it is worth having a mortgage banker go over your current situation and lay out all the diffrent loan options for you. And show you side by side how each loan (including your current loan) will perform in the the next 4-5 years. 
Then at that point you will have all the information you need to make the best decision for your current situation. 

If you would like, since you are member of zillow. I will offer you a free Total Cost Analysis Report that will do exactly what I explained above.  

All I need is your current mortgage information: Loan Amount, Rate, Caps (if you know), month and year loan was originated, Value of the home, current mortgage payment, are the taxes and insurance included? and last but not least what are your taxes and insurance payments per year. 

That is all the information I need. 

  • March 29 2009
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JHMN, contact this lender in MN and she can give you multiple options and will be in good hands:
 http://www.zillow.com/profile/MN-Mortgage-Mom/

 
  • March 29 2009
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Profile picture for Bentley Advisors
Submit a loan request on Zillow Mortgage Marketplace.  It all depends on your loan scenario.  It's all about the #s.  Once you submit your request, contact a few lenders and pose the same question to them.  Have them run a simple breakeven analysis to ensure you recover your closing costs and then some before you leave the home.
  • March 28 2009
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