Posted on: 24th Dec, 2008 05:37 pm
Hi, I have a 5-yr ARM at 5.125% that ends in December of 2009. Since the 30 yr fixed now is around the same rate, does it make sense for me to re-finance at this time? Thanks.
hi tznj,
as the rates are low, a number of people are refinancing the mortgage at a lower rate. you can also try refinancing the loan and in my opinion, a 30yr fixed will be a good option. you can check with your current lender as well as with other lenders and compare the terms and conditions prevailing in the market. then you can choose the one you can afford. this community also has a large number of lenders and you can seek a no-obligation free mortgage consultation from them. this will also help you in comparing the market rates.
however you should remember that when you are refinancing the loan, you will have to pay the closing costs as well. so if you can afford paying the closing costs, you can refinance the loan.
wish you a merry christmas.
thanks
as the rates are low, a number of people are refinancing the mortgage at a lower rate. you can also try refinancing the loan and in my opinion, a 30yr fixed will be a good option. you can check with your current lender as well as with other lenders and compare the terms and conditions prevailing in the market. then you can choose the one you can afford. this community also has a large number of lenders and you can seek a no-obligation free mortgage consultation from them. this will also help you in comparing the market rates.
however you should remember that when you are refinancing the loan, you will have to pay the closing costs as well. so if you can afford paying the closing costs, you can refinance the loan.
wish you a merry christmas.
thanks
I have a lender who will handle this. Email me, and let's discuss!
MSmith@PrecisionFundingUSA.com
M. Smith
I am on line now!
MSmith@PrecisionFundingUSA.com
M. Smith
I am on line now!
i would suggest to you, tznj, that you ignore the blatant advertising done by mr smith above. this is a person who willfully ignores the guidelines of this website and that kind of behavior reeks of poor service, deceitfulness - you name it. i would be most hesitant to begin working with someone who is so bold in his breaking of the rules.
caveat emptor - let the buyer beware!
caveat emptor - let the buyer beware!
i apologize to you tznj.
i got so caught up with dealing with our interloper that i completely neglectged your question.
refinancing now is not a bad idea, inasmuch as you can lock in the same rate you have (or better, maybe), without having to go through the next 12 months of wondering how things will go.
risking that rates won't go up appreciably is also a reasonable thing to do; but the bottom line is how you feel. if you have reached the conclusion that refinancing makes sense now, then go ahead and dive in.
i got so caught up with dealing with our interloper that i completely neglectged your question.
refinancing now is not a bad idea, inasmuch as you can lock in the same rate you have (or better, maybe), without having to go through the next 12 months of wondering how things will go.
risking that rates won't go up appreciably is also a reasonable thing to do; but the bottom line is how you feel. if you have reached the conclusion that refinancing makes sense now, then go ahead and dive in.
You are not looking at one of the most common reasons to refinance--how much money will I be saving monthly.
You are looking at a different reason to refinance--since my ARM may rise in interest rate starting in 12 months and may rise yearly after that, what should I do.
There is no mathematical answer to your scenario.
I would say that the larger your loan amount and the longer you plan to stay in that house, refinance to 30 year fixed while rates are low.
If your mortgage is $90,000, it does not so much matter what you do.
If your mortgage is $350,000, refinance as long as you plan to live there a number of years.
Some 5 Year ARMs have an initial rate cap of 5% and some have 2%. If your initial rate cap adjustment is 5%, another reason to refinance ASAP.
Right now a 15 day rate lock is much better than a 30 day rate lock due to the way the secondary market is pricing.
A game plan to consider would be: pay for the appraisal and get the processing out of the way and ready to close.
When rate is where you want it, lock for 15 days and close.
If that means watch rates after processing for one or two months, that may be a good "bet" based on what the fed is saying about their buying bonds and mortgage backed securiites, do it. It simply means you get another month or two or three at 5.125% until you see if you can get lower rate than 5%.
No one can guarantee the future, so either lock for 30 days and process and close or gamble a little and go for the 15 day lock rate, whatever it is a month or two down the line.
You are looking at a different reason to refinance--since my ARM may rise in interest rate starting in 12 months and may rise yearly after that, what should I do.
There is no mathematical answer to your scenario.
I would say that the larger your loan amount and the longer you plan to stay in that house, refinance to 30 year fixed while rates are low.
If your mortgage is $90,000, it does not so much matter what you do.
If your mortgage is $350,000, refinance as long as you plan to live there a number of years.
Some 5 Year ARMs have an initial rate cap of 5% and some have 2%. If your initial rate cap adjustment is 5%, another reason to refinance ASAP.
Right now a 15 day rate lock is much better than a 30 day rate lock due to the way the secondary market is pricing.
A game plan to consider would be: pay for the appraisal and get the processing out of the way and ready to close.
When rate is where you want it, lock for 15 days and close.
If that means watch rates after processing for one or two months, that may be a good "bet" based on what the fed is saying about their buying bonds and mortgage backed securiites, do it. It simply means you get another month or two or three at 5.125% until you see if you can get lower rate than 5%.
No one can guarantee the future, so either lock for 30 days and process and close or gamble a little and go for the 15 day lock rate, whatever it is a month or two down the line.
given the current 5.125% rate, i suggest you heed john's advice here. if rates slide some, you'll benefit and at the same time, your risk in this overall scenario is minimal, tznj. the worst-case in the next month or so is that you'll have to live with the current rate. millions would trade places with you right now if they could.