Should I refinance my 5:1 ARM to a 30 year fixed or keep my ARM?

I have a 5:1 ARM 30 year loan and this October it will adjust for the first time. Currently my ARM is at 6.65% and am paying $1474 a month and I have an adjustment cap of 2% up or down per year. So my best case scenario for this first adjustment is 4.65% giving me a lower payment. Taking this option will leave me with 25 years to pay on this ARM, but without the security of a fixed payment.

Currently I am under water and considering refinancing for a new 30 year fixed rate loan at 4.5% and a payment of $1134 under the HARP 2.0 program with my current lender. My home is currently valued at $80,000 and I owe $154,000. Under this scenarion I will have to pay a total closing cost of $3,600 and will have to start again at 30 years but will have the fixed rate on my Florida home.

My question is:

Would it be wise to refinance at the 4.5% 30 year fixed or do you think I would be safe to bet that the ARM will not rise anytime soon and maybe even lower in the next few years enabling me to have a lower payment. The HARP 2.0 refinance program is set to expire by the end of 2013.

What would you do?

4 Answers

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  • Anonymous
    8 years ago

    I would refinance that bad boy into a HARP 30 yr fixed.

    The closings costs are much less than a normal refinance and it is fixed..

    No way will it go up at such a low rate while your adjustable is pretty much at rock bottom.

    Plus, an added benefit is the loan may be assumable. My mom is going through this and was surprised at it being assumable. This is really attractive, say, in 7 or 10 years if you decide to sell. If because your equity will have to increase.

  • Anonymous
    3 years ago

    I also asked the same question several times, and did not receive an answer

  • Anonymous
    3 years ago

    I was wondering much the same thing

  • 8 years ago

    sure if u want

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