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Ihave an ARM at 4.75.shoudl I refinance for a fixed 15 year or take a chance of waiting another year

I bought in 2003 and had a fixed rate for 5 years and then went to ARM which adjusted down to 4.75.I want to live in my home for at leat 15 years.should I refinance now to get a fixed rate or wait and take a chance rates will remain low.
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March 05 2009 - Mill Valley
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Answers (3)

Tina,
I am not sure if you have refinanced yet.  My questions to you are what is the amount you owe and what are you trying to accomplish with your refinance. 
Different clients are trying to accomplish different things but the end result is always the same, pay off the mortgage as quickly as possible. 
If you have monthly cahs flow and good credit there is a program that you might want to just take a look at.
www.homeownershipaccelerator.net and check out the 8 minute video.
It is always a good thing to know all of your options so that you can make a true informed decision. 
Good luck and I wish you well!!
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November 02 2010
Tina, I wouldn't take the chance of waiting.

15 year fixed rates are pretty low right now.  I wouldn't necessarily buy-down a 15 year just because the cost of the buydown will barely pay off in the long run.

Find a good broker, or lender, and ask for a good, wholesale par rate (you'll need to use a broker to get a wholesale par rate).

If you have a good equity position, and a higher than average credit score, you would be looking at about 4.500% to 4.625%, depending on your equity position, without a buydown, for a 45 day lock. 

Buying down (with us, at least), paying about 1% discount to get down to 4.25% is pretty expensive, as that extra cost upfront will hardly lower your overall payment.  You would need to see a comparison of a wholesale par rate vs. a buydown rate, with costs and payment differences disclosed so you can make a decision.

When rates start going up, assuming you wait another year, you will be behind the power curve... and will be taking a higher fixed rate over the next 14 years, should you wait and rates go up.

Just think about how much money the government is going to print, over the next 12 months... all of it borrowered... and how high the deficit is going to be.  Once the country goes into recovery, inflation is going to be a huge concern, and fixed rates will have to go up along side of treasury yields.

I would refinance now, if I had a variable rate mortgage.  When inflation starts going up, (and it will, sooner or later), you will be glad you have a fixed rate mortgage, and didn't wait.

Good luck.
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March 06 2009

You could actually "buy down" your rate even lower if you want to. This would pay off quite quickly for you since you do actually plan to pay off the mortgage. Many borrowers are not as long term thinking as you seem to be.


I guess the question is: What rate are you waiting for the market to hit? Because you can always pay down the principle early and reamortizing the difference would effectively be the same in the end as having a lower rate over the longer term. But if it's all about rate, then you should look at buying down the rate. I'm not sure how much lower they could go beyond what you could buy it down to.

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March 05 2009
 
Related Questions
Ihave an ARM at 4.75.shoudl I refinance for a fixed 15 year or take a chance of waiting another year
Profile picture for Julie Posey
Latest answer by Julie Posey
November 02 2010 | 3 answers
  • Asked by tinamillvalley
  • In Refinance
  • March 05 2009
Mortgage Rates
 
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