2029

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.

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 wrote:Why do people get ARMS. Such a scam.

We got one in 2007 and it never went up, only down. Eventually refied at a lower interest point in 2016. Great deal.

Anonymous wrote:

Anonymous wrote:Why on earth would you refinance before 2029?

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?

It’s way too early to refinance now. That’s all I can tell you.

Anonymous wrote:Why do people get ARMS. Such a scam.

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 wrote:I have a 4.25% Arm that adjusts in 2022. I’m going to wait it out and see what happens.

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 wrote:Why on earth would you refinance before 2029?

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?

Why do people get ARMS. Such a scam.

Why on earth would you refinance before 2029?

Anonymous wrote:I have a 4.25% Arm that adjusts in 2022. I’m going to wait it out and see what happens.

2032

I have a 4.25% Arm that adjusts in 2022. I’m going to wait it out and see what happens.

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.

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.

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.