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My ARM is resetting in Sept 2010. I am at 5.25% now. Should I let it become variable at that time or should I refinance now?

by JustinHolmes from Overland Park, Kansas. Jan 16th 2010 Reply

Leo Harvey (LHARVEY)
#6 ranked lender in Pennsylvania - 149 contributions

Wouldn't it be great if you or I could predict the future and answer questions like this without fear or hesitation. Unfortunately that is not the case. Here's how it works: If the economy stays in a funk like it has been the last 2 years, rates will probably not increase much if any when Sept 2010 comes around. In that case your ARM will not move much depending on the loan details. Current fixed 30yr rates are in the 5.25% range so you can maintain status quo if you want to spend money to refinance. That rate is for very well qualified borrowers. It is also possible that your ARM may adjust downward depending on the inception date. You as the borrower have to determine how much rate risk you are willing to accept.

Jan 18th 2010
Kent Hackman (Kent Hackman)
#3 ranked lender in Kansas - 2 contributions

Yes, with where the market is and rates are at it would be a good idea for you to look into this as rates can go up at anytime and it wouldn't be worth the risk compared to where rates are at in today's market... Hope this helps!

Jan 18th 2010
Rob McAllister (Rob McAllister)
#6 ranked lender in Washington - 48 contributions

I would suggest you take a very strong look into refinancing if you plan to stay in your home more than 2 years. Though current indexes are very low and thus your rate may not adjust upward (and could actually go down) if you allow your ARM to go into its adjustable period you will be subject to changes from that point forward and you can certainly expect rates to go up in the coming years on all indexes. Though I dont have a crystal ball if you look at past trends and averages we are way below average now and thus it would be a lot to expect these rates to last. Interest rates on 30 year fixed loans are lower now than you can expect to see in September. I would suggest you shop around and weigh the time you plan to stay in the house and the costs to lock in a good fixed rate with the risk of an uncertain rate going forward.

Jan 19th 2010
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