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Time to refinance my ARM?

3/1 ARM, originated in 2003, present rate is 3.875% (adjusts again spring of 2010).  Loan balance is 188k, purchase price was 224k and estimated value is 380k (my estimate based on comps).  The property is in Arlington, VA (NOVA) its a 2 bed/2bath, 1500 sqft, condo (only a 6 unit building) built town home style.  I would like to think I am staying put in the area (fed-gov employee) and may want to lease out and look to buy SFH. 
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November 19 2009 - Penrose
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Answers (6)

I agree with all said so far.  Most push for a long term solution which, if you plan on keeping the property for a long time, does make sense.

That said, the fear of your loan adjusting can quickly be squashed by reviewing the terms of your ARM.  Most ARM's are resetting to LOWER rates.  Only subprime loans with high margins are making big jumps right now.

It's not a long term solution but most ARM's reset and stay fixed for a year before adjusting again.  See these blog posts for details.

http://www.zillow.com/blog/mortgage/2009/08/11/understanding-adjustable-rate-mortgages-part-i/

http://www.zillow.com/blog/mortgage/2009/09/16/understanding-adjustable-rate-mortgages-part-ii/

http://www.zillow.com/blog/mortgage/2009/11/13/understanding-adjustable-rate-mortgages-part-iii/
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December 24 2009
Ah the same old question....we get it a lot and I say no most of the time. It depends on what's important to you as it relates to your exit strategy and your short term plans. There's a very strong probability that ARM will continue to stay low while fixed rate go up in the 3rd quarter of next year. Look at the history of the index that your product is going to adjust on before you make any moves. Evaluate that with a professional and find a conclusion that matches the needs explained above.
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December 23 2009

I agree with Rudi, begin with your existing lender...Rates are definitely LOW right now for fixed rates, who knows where they will be down the road. Good luck in finding the best rate and terms for your loan! Jim

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November 20 2009
I would check with your current lender what their fixed rates are currently. You may not have as many fees than going with someone else and they are familar with the property. 6 unit condo may cause problems elsewhere.
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November 19 2009
I would highly suggest refinancing into a fixed rate loan. Especially if you want to make it a rental one day you will want the stability and predictability of cash flow that comes with a fixed rate. You can get a fixed rate at approximately 4.5% today and you will not have to worry about rate changes. If you wanted to get a 15 year mortgage you could get 4.25%. .
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November 19 2009
If you plan on making it an investment property down the road, then it's a great time to refinance.  Rates are low on fixed mortgages.  If you wait until it is non-owner occupied to refinance, you'll be looking at worse pricing.

It would be difficult to give up the ARM you're in now, though!
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November 19 2009
 
Related Questions
Time to refinance my ARM?
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Latest answer by Keane Ng
December 24 2009 | 6 answers
  • Asked by tahoe1167
  • In Refinance
  • November 19 2009
Mortgage Rates
 
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