Currently have an ARM when to refinance
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Anonymous
| I have an ARM rate of 4.325% on my house that is set to expire in 2029. I doubt rates will come down to those numbers anytime soon, but I wonder at point it will make sense to refinance. Is anyone in this situation? It feels weird to go lock in a rate that would require a higher monthly payment than what I owe currently. |
Anonymous
| I would wait. If you see rates comes down, refinance and lock in for a fixed rate or a long arm. If they do not, keep waiting. |
Anonymous
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That's a tough position, OP. You are right that rates are unlikely to sink below that anytime soon - possibly never.
I have a 6.5% ARM that's set to reset in 2030. |
Anonymous
| I have a 4.25% Arm that adjusts in 2022. I’m going to wait it out and see what happens. |
Anonymous
2032 |
Anonymous
| Why on earth would you refinance before 2029? |
Anonymous
| Why do people get ARMS. Such a scam. |
Anonymous
Well let's say interest rate dips to 5.5% before 2029. If I don't refinance and rates go up again, I am looking at who knows what interests later. So is it better to lock in a higher rate that at least gives me some predictability? Or just gamble and be ready move if rates go through the roof? |
Anonymous
By wait it out you mean you won't refinance until rates go at or below 4.25? But that might never happen again. |
Anonymous
Every home I ever bought, both for primary residences and for investments, were financed through ARMs. I’ve come out ahead every single time. |
Anonymous
It’s way too early to refinance now. That’s all I can tell you. |
Anonymous
We got one in 2007 and it never went up, only down. Eventually refied at a lower interest point in 2016. Great deal. |
Anonymous
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No reason to rush to refi here.
What are the terms of the ARM - meaning when it resets, what is the index, what's the margin and what's the cap? If the cap is 2%, then that means it can only increase to 6.325% and you wouldn't refinance unless rates were better than that. But if the cap is 5% that's a different story. |
Anonymous
| Above poster is correct- you need to read the “Adjustable Rate Mortgage (aka ARM)” disclosure that you signed at closing. It will tell you your “initial” , “annual”, and “lifetime” rate caps. For a 7yr or 10yr ARM, these are generally something like 5%, 2%, and 5% respectively. So, the first (aka initial) rate adjustment could go up or down by 5%, then each subsequent (aka annual) rate adjustment could go up or down by 2%, and your lifetime cap is 5% up or down. The bank recalculates your interest rate by adding an index value (like the SOFR or US treasury rate) to a margin that they disclosed to you in your loan docs. When your loan readjusts it will generally be pretty close to current market rate. Since it will re-adjust every year thereafter, you will get the benefit or cost of however the current market rate moves. |
Anonymous
| 2029 |