Ali
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Play around with the historical mortgage rate data on the link below and you will see that 6.625 is a good rate, especially on an investment mortgage.
People have gotten rather spoiled with the low rates we have had the last 5 years. If you track rates back further you see this has not been the norm.
Since you have reached the 5 year point on your ARM the rates will now begin to adjust every year. Chances are extremely good that rates will continue to go up, lock in now or you will just keep seeing it rise.
If there is no cap your loan you could get a much higher payment than you ever thought possible if you keep letting it adjust. |
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studlydude66
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You should refi. With the economy in a recession, the rates are low now, but once things start getting better in 6 months to a year, interest rates will start to go back up. If you are locked in at 6.625%, you will be fine. |
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royalbird
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I would refinance to the fixed, unless you'll be selling the house in the next couple years, but right now is not a good time to sell. |
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bigsky74
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they are not going to go down. get out of an arm it's never a good idea. |
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visvardis
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lock it in |
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Baby girl Due 1/25/09
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You're always better off with a fixed so honestly I would refinance. You never know when that rate is going to go up again and really kick you in the butt. |
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adp_14
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See what the lifetime cap on adjustments is. It's possible that the rate will never adjust above 3% above the original rate, so then you have to decide if it's worth it. I don't think rates will be coming down significantly anytime in the next several years, and will probably go up significantly over the next 12 months. |
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Heather
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Refinance to the fixed. Its the best thing you can do. |
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Dale H
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How long do you plan to hold on to the property? The shorter your holding period the more I would favor the ARM. Is it a 5/1 ARM or a 5/5 ARM? Otherwise you are just out of pocket for a higher rate today.
The longer you plan to hold it, the more I would favor fixing the rate.
On the other hand, I don't think you should rush in to a refi with those costs immediately. I have seen rate forecasts for the fall that predict lower rates by as much as 0.5%. Rates are up from what they were a month ago by the same amount.
You may just want to take a wait and see attitude for now.
Good luck no matter what you decide. |
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patrickehoward
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i find it interesting (and amusing) that all answers so far have been to lock. this is reflective of humans as pack animals... follow the herd. If it is going to re-set next month to 5.25% that is still much lower than 6.625% currently quoted. I don't see any reason to drop $3k to adjust up to 6.625% when no out of pocket will keep you at 5.25%. I realize the US (world) economy is experiencing pretty strong inflationary pressure right now but I also do not believe we will see any significant increase in interest rates in the next 3-5 years. Unless/ until your ARM moves to or past the 30 yr fixed rate, I would hold tight. |
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Scott K
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I think you should look around a little and see if you can find a lower rate. I just heard 5. something on the radio in the past week or so. I think I would let it float for the time being. The interest rates might drop again given the most recent news on the economy. But, on the other hand, there seems to be quite a spate of inflation too. I see it as a toss-up. |
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sandra k
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by all means go with the fixed rate.
Even if is a little higher. The way the economy is now one never knows what will happen. It could dramatically increase or could lower but lower is highly unlikely.
Talk with your mortgage company. I bet they will say go for the refinance.
Best to stay away from ARM mortgages now. |
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First L
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I think mortgage rates are going to continue to increase.
How much would your closing costs be to refi? How long do you intend to stay in your house? What would the difference in your payment be? Compare that way. |
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Paul in San Diego
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How long do you plan on owning this property? If it's a rental and you don't plan on owning it forever, stay with your current mortgage. Even if you went with the fully amortized fixed, most of your payments are interest for the first 7 years or so, anyway. So, you'd be paying a lot more per month just to pay more interest? Doesn't make sense financially.
If the interest rates jump next year, raise the rent (average rent increases in So Cal are about 5% a year) to make up the difference. If they don't increase, raise the rent anyway (more cash flow). That's the advantage of being a landlord. Someone else pays your mortgage for you. Even if it increases. |
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Sweetness
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I'm with ADP-14, check to see if there is a cap. You may be there after 5 yrs. If not, it can go up an additional 2% next yr. |
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Susanna Banana
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ok i know your looking for an answer but i just wanted to tell you that i jus found out what tht meant last night... me and my mom were watching t.v and a commercial came on and i was like why would his arm (like the body part) readjust?! she was like no adjustable rate mortgage i was like oh... haha but ya sorry i cant help im only 14 |
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