Profile picture for msp987

Should I ride out 5 year arm or move to 30 yr fixed jumbo

Current : $590K mortgage, 5 year arm -- currently at 2.99%, increase 2% in 2018, 2% 2020 and finally 2% in 2022 (maximum increases).  Is it worth riding out current loan or moving to a 30 year fixed Jumbo? Value of home 1+ year ago was $710, estimating significant increase if I re-evaluate based on recent sales for area.
  • October 10 2013 - Milton
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Answers (13)

Profile picture for RafaelAPRG
You should contact your local mortgage lender as they are well suited to discuss the different options available
  • October 26 2013
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Even if your appraised value has not increased that much and you want to look at competitive fixed rates please contact me via my profile to discuss.
  • October 26 2013
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If you plan on being in the loan longer than 7 years, I would refi into a 10 year ARM now. If not, keep the loan you have. The interest you save over the next 5 years will make it worthwhile in a 7 year timeframe.
  • October 18 2013
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I agree with @David. Keep the loan as is and look at a new adjustable nearer the end of your fixed term. I would recommend monitoring your index in 2017 to determine where your loan is going to adjust to at the end of the five years. Who knows, your rate could very well go down.

Many, many consumers pay far more than necessary on financing of larger loan amounts because of the fear of a adjustable rate mortgage.  I believe is educating consumers to make the best decision for their individual decision.  You will save far more money over the next few years than it will cost you to refinance in the future.

All my best,

Deborah
NMLS #279125
WJ Bradley

"We Listen.  We Care.  We Deliver."
  • October 18 2013
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Keep it! Do another arm at the time of adjustment..
Good Luck
  • October 17 2013
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Historically people refinance every couple of years. Depending on how long you plan on staying in the property will determine what would work best for you. You will always get a lower rate with an ARM but need to refinance before it adjusts. Being in a fixed rate allows you the peace of mind of not having to worry about adjustments. Also you could look into a 15 or 10 year fixed to get a slightly better rate depending on how comfortable you would be with the payment.  If would like more specific information please let me know or you can click on my profile.
  • October 17 2013
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Profile picture for shapiroamg
You could get a 7/1 Arm that is in the low threes which would buy you some more years.  Fixed Jumbos are in the 4s. 
  • October 17 2013
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Two words:  "It depends".  Time horizon to remain in home?   If horizon is 'forever', then by all means lock it in now - cheapest money you will ever see on a fixed, 30 year basis.   If your horizon is 7 years or less, you're done - no changes needed.
Anywhere between 7 years - forever, then you have a financial decision to make which an experienced mortgage lender, cpa, or financial advisor can assist you with.
  • October 14 2013
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Ride, it out. No matter what today moving to 30 year fixed would raise your payment. Also keep in mind it does not necessarily jump the 2% that is a maximum cap. To find out exactly you need to check your margin, probably 2-2.5% and add your index (most likely one year LIBOR currently at .67). That being said an adjustment tomorrow would still trend downward, and for your rate to go up 2%, the LIBOR needs to improve 4x over
  • October 11 2013
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This is really a personal decision that only you can make.  I recommend talking with 3 lenders in your area that you trust... tell them everything you can about your goals, plans, current condition of your finances, etc... so that they can provide you with their best recommendation. Good luck !
  • October 11 2013
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30 year loans are great if you need that much security but most people don't. Many homeowners refinance or sell way before the 30 year term is up.  The average loan lasts about 8 years.  So the answer to your question depends on how long you will be keeping the home.  Personally I don't see the rates exploding up over the next few years so I would personally ride it out for now.  You are locked in at 2.99% for another 4-5 years!  If you are really worried about it you could simply get another 5/1, 7/1 or even 10/1 ARM.  Like I said it just depends on how long you plan on being in the home and what kind of risk you are willing to live with.
Best of luck! 
  • October 11 2013
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How long will you own the home? If longer than 5 years but 10 or less, look at 10/1 pricing as it is close. 
  • October 10 2013
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Lock in asap.  Rates are going up.  Who knows where they will be in 5 years.  Big risk in waiting to lock in.
  • October 10 2013
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