Profile picture for ekantvaad

refinance: currently 5.25/30 yr fix - will move in 5 to 7 years - need advice on refinance

I am thinking of 5/1 ARM unless I get a better rate on 30 yr fix. have 25% equity in the condominum.

  • May 02 2010 - Santa Clara
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Answers (14)

I would consult with a loan officer that uses the Mortgage Coach software. This software clearly illustrates your benefits and costs visually so that it becomes much easier to make a decision.
  • October 27 2010
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Profile picture for Erick Rodriguez
your best option would be to contact a local mortgage broker.
  • October 11 2010
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Like others have said you should look at a no closing cost loan.  I'm curious what is your loan balance?  If it's low it doesn't make sense to refi, if it's higher you should definately do something.
  • September 29 2010
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Currently you can refinance on a 7/1 arm at 4.00% with no closing costs besides your pre-paids. A total cost analysis will show the benfit as compared to your current loan. Contact me and I can put one together for you in a few minutes.
  • September 29 2010
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I would recommend you do a NO COST loan., what i mean by no cost is that the lender picks up all the fee associated with the loan in turn for slightly higher interest rate.  Today the best rate is 4.125% 0 points on a 30year fixed 75% LTV on a condo.  If you opt for a rate of 4.375% the lender will cover all the closing costs therefore making your savings positive starting with month #1.  I based this pricing off 75% loan to value condo, 740+ Fico

  • September 28 2010
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As to the whether or not to choose an ARM or fixed rate product, I would say it depends on how certain your time frame is to sell the property.  No one knows where rates will be in 5-7 years (not to mention property values) but there is a good chance they will be much higher and you do not want to put yourself into a bad situation down stream.

With regard to the cost/benefit analysis, you need to have a total cost analysis performed.  This type analysis takes the total cost of the loan amortized over the target time frame and then looks at the net savings...it is much more accurate than the traditional recapture analysis.  Plus, keep in mind the the any savings achieved would be guaranteed which is hard to find when compared to any other investment.

Hopes this helps...

  • September 28 2010
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Profile picture for mahesheswar
You could get a rate of 4.125 or 4.5 on a 30 yr fixed right now. Check with Amerisave, Quicken loans etc. This is a good rate to have for long term. If you go with a 51/2 or 71/2 arm now, you carry the risk of interest going up after few years. My logic is that the interest rates have hit a rock bottom now and can only go up in future. So why not take advantage of the ability to lock your rates for long term now with very low rates.
  • September 28 2010
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Profile picture for skenn
The rates are low for a 5/1 arm but if you are staying longer you need to compare the 7yr rate against the 30 yr fixed.  Be aware that since there are so many condos on the market lenders have started charging a pricing adjustment for condos.  Your rate will be slightly higher than on a detached single family home.  Ask your lender what the payback period will be.  An example:  If closing costs/prepaids are $5,500 and savings on payment is $90.00 then it will take you 61 months or 5+ years to break even.  Get it in writing to compare.  Also you will be using up equity that you could use when you sell and buy something else.
  • September 27 2010
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Profile picture for BINNY JOSEPH
You can get 30 year fixed rate below 4.5%. This is historically low rate, so it is better to refinance now.
  • September 26 2010
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I have to disagree with you all!!!  refinancing from a 5.25% 30 year fixed into a 4.125 7 year ARM has significant savings.  Depending on what part of Santa Clara, CA, i would assume your value is at least 600k+ and with only 75% financed you are carrying 400-500k at least on a loan.

Reduction of rate by 1.125% equals more than $5000/year savings of interest payments alone or $300/mo less in principal interest payments.

With a window of only 5-7 years, the assumption would be to save and upgrade/relocate after 7 years.  $300 savings/mo equal $25000 more in your pocket after 7 years.
  • May 05 2010
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I'm with Rudy and Paul it's best to stay put instead of trying to recoup the costs associated with refinancing.

What do you have to gain by refinancing at this time?
  • May 04 2010
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I agree with Paul. With all the problems today with condos and the heavy fees attached, your better off staying with what you have. ..... Happy funding, Rudi
  • May 04 2010
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Sometimes the smartest thing to do is to do nothing...this would seem to be one of those occassions.

  • May 04 2010
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30 year fixed is the most conservative route and slightly improves your rate down to 4.875%.


I would recommend a 7 year fixed ARM program which is at 4.125% currently and the moderate option.  This fits best within your 5-7 years of moving and has a very low and agressive rate.


5 year fixed ARM is available and at the lowest 3.75% rate currently and will adjust annually based on the current LIBOR rate.  Same LIBOR terms apply for 7 year fixed.



  • May 04 2010
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