Should I refinance?

I have a low rate mortgage 4.75%, but it is a 5yr ARM which will adjust June 2010.  Should I refi now that fixed rates are low or wait until 2010 when my rate adjusts?
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December 18 2008 - Melville
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Answers (4)

Profile picture for HowardRoth
You should also look at what the formula is for your rate to adjust.  If you have one of the loans that will go to the Fed Funds Rate plus 4%; you're not looking too bad, now that the Fed Funds Rate has been reduced from 4.5% to 0.25%.  Many of the other adjustment indexes have been reduce as well.  This has tremendously reduced the impact of most of the rate adjustments that are going on now.  Of course; what those numbers will be in 2010 is still uncertain. 

Another thing you might consider before refinancing is contacting your current lender and asking for your existing loan to be recast or modified.  If you have a good payment history, your lender may want to keep you happy and not let you refinance and wind up with one of their competitors. You may be pleasantly surprised to find your lender quite cooperative. 

On the other hand; if you have a poor payment history and/or a job loss or other problem, there are now federally encouraged loan modification programs that might work for you. If you have a high loan to value FHA loan and your house has gone down in value, you may even be able to negotiate a reduction in the principal balance of your loan.
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December 18 2008
Danny; I would watch rates and shop during the next three months, we are seeing some lenders, offer specials, ie zero fee, free appraisals, etc. that may only last for a week or even a day.  Hook up with one or two active lenders and have them update you with any changes. Rates could go lower in the short term.  If you have to pay any fee, you can simple figure out what your savings are per month and divide that into the amount of fees to detirmine how long of a pay back on the fees. If there are no fees, anythink equal to or less than your current rate,  I would pull the trigger.  Also if you have any equity, when/if you refinance you might consider pulling some equity and picking up another investment property, at a discount.
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December 18 2008
Profile picture for Wayne.T_ .....Colo.
danny,

It depends somewhat on how long you plan to stay in our home and also on the loan to value.  If you plan on staying long term, and your LTV is 80% or under, now is a good time to refinance.  If there is a chance of moving, selling, or other changes, waiting is better. If yor LTV is above 80%, use a little time to pay down the balance to bet the preferred rates. 

Best wishes
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December 18 2008
Depends on what the closings costs are and how long do you plan on being in the house?
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December 18 2008
 
Related Questions
Should I refinance?
Profile picture for HowardRoth
Latest answer by HowardRoth
December 18 2008 | 4 answers
  • Asked by Daniel Guillermo
  • In Refinance
  • December 18 2008
Mortgage Rates
 
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