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[quote=Anonymous]We refinanced into a FHA 5-year ARM in 2011.  Interest rate is 3.75.  We thought there was no way we wouldn't sell the house before 2016, so we didn't worry much about the ARM.  As things often go, our plans have changed, and now it looks like we may still be in the house when the rate is scheduled to adjust, in May 2016.  The interest rate is capped at a 1% increase per year and a 5% lifetime increase.

We have enough equity in the house now that we could re-fi into a conventional loan and cut out the monthly FHA mortgage insurance payments.  But there are the costs associated with re-fi.  Also, if we re-fied into a conventional 30 year fixed today, the rate would be more than 3.75, and we still have two more years left at that rate on the ARM.  I'm not sure it's worth it to give that up now to hedge against rates going higher, especially since our potential increases are capped at 1% annually.  But rates have nowhere to go but up.

Can someone please help me think through whether it makes sense to refi now?  I don't really trust most mortgage brokers since they seem to always push you to refi, whether it's in your best interest or not.  TIA![/quote]

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