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re: Mortgage rates trend for the rest of the year?
Posted on 9/8/14 at 7:41 pm to hawkeye007
Posted on 9/8/14 at 7:41 pm to hawkeye007
We are planning to refinance our home. We are currently at 4.5% on a 30-yr fixed and want to switch to an ARM. This is a starter home and we don't expect to stay here for more than 6-7 years. In this situation would you rather go for a 5/1 or a 7/1 ARM? Obviously the rates are better for the 5/1, but I fear it might be a little to aggressive. But when I look at the rates for 7/1 vs our current 30-yr fixed, the 7/1 will only be about $225 less per month and I begin to wonder if that is enough of an incentive to switch to an ARM. It is so hard to decide what is the right thing to do and I have come to the MB for help.
2
Posted on 9/8/14 at 10:04 pm to saintforlife1
Well, just crunch the numbers. You would save $225 x12 months x 7 years at best ($18,900). 5 years would save you $13,500. How much would the refinance cost? That's the critical remaining question?
Posted on 9/9/14 at 12:18 pm to saintforlife1
back out your closing cost and you stand to save 10k on the refinance. the 7/1 arm isnt worth the cost the rate on the 7/1 arm isnt low enough to make you move. the 5/1 is 1% lower than your current rate.
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