With all due respect, what you said doesn't make any sense. If you have 8 years left now at $xxxx.xx per month and you refinance to a lower rate and make the same payment as you were making before and still finish in 8 years, what exactly do you gain? The answer is nothing. The only way this would make sense is if refinancing to the ARM at the lower rate would shorten the time to payoff by making the same payment as you are now. You should look at doing a 7/1 with no out of pocket expenses, keep making the same payment as you were before and look to shorten your payoff by 2 years. If you are in CA, give me a call and I'll go through the numbers with you.

I see you are thinking outside the box, but I see a few issues with this plan. 1) What is wrong with a 4.875% interest rate?2) What are you going to have to pay in finance charges to get the new loan?3) What is likely to happen with the interest rate you buy into on the ARM? I can answer that... it will go UP! I would recommend you complete the pay off of your current loan by making extra principal payments... if you want to afford them.

A few items to keep in mind- any arm product will come with a 30 year ammortization period so what you have to do to make this make sense is look at paying the loan off in 7 years at the lower rate and see what amount of interest savings you will gain by switching to this program. That is where you are going to see your net tangible benefit.