Should I refinance my loan to a fixed rate?
Finances are in effect too because I am getting married in 5 months and money is getting tight.
Answer:
First off I want to congratulate you on second guessing a loan that you're not comfortable in. A lot of people are in your situation with option ARMs and I commend you for doing something about it.
A few posters have recommended staying in your ARM because the rates will stay low. This would be great advice if we were gauranteed low rates, but were not.
I called the guy to have the crystal ball installed in my desk and would you believe he never showed up?
At the end of the day what you have to think about is what makes life bearable for you. Will you be able to sleep well at night knowing that your interest rate will be recalculated monthly? Is it okay with you that you have no way of predicting how much interest you'll be putting back into your loan balance?
A thirty year fixed is a great option if your very open ended in your outlook. However, if you KNOW that your only going to be there for five years then a five year fixed might be an option for you to consider as well.
The thing that concerns me is that your not comfortable enough with your current agent to ask him or her these questions directly. If you feel more comfortable going to the web, then that may be a good indication that your not working with the right person.
If you want some more help you can shoot me an email and I can review everything for you to make sure your getting a good deal.
I've just refinanced for 5 years fixed rate after much advice so I would recommend the same thing.
You have run the numbers and the payback is there. I don't think rates are coming down much but I don't think that you will see a huge upturn in rates in the short term. I am not a fan of ARMs so I would refi now.
Since you are planning to be there another 5-7 do it. The only other advice that you should take is make extra payments on it so when you decide to move you have a lot of equity, thus making it a lot easier to move up to a bigger better home (maybe on the beach).
I believe I would go for the fixed rate, check with your accountant, the penalty may be a deductible in this case., Ask if they (IRS) consider this prepaid interest.
Not Sure
I would ask them if you are internally refinancing with the same company, if they will waive the prepayment penalty. I work for a mortgage co. and if the customer refinances with us, then we waive the prepayment penalty. That is a good interest rate and especially if it is fixed. Just remember, if you escrow, your taxes and ins. , your payment may still go up if your taxes or insurance go up.$15,000.00 is a lot though for a prepayment penalty, see if they will waive it. Good luck
Shop it around...6.125 is a good rate, but see if there is anyone else out there who will refi with no fees...
I have a couple of questions for you- first, you aren't considering using the same loan agent that reamed you with your option arm, are you? Unless your credit is really bad, the only reason for a three year prepay (and I'll bet that's what you have) is that the loan agent makes a ton of money on the deal. It's called yield spread premium- ask him about it. Second, since you have an option arm why don't you make the interest-only payment for the remaining two years and put whatever you can toward principle? That's gotta be lower than 6.125%. Third, if this 30 year fixed refi is no points and no cost, what the #@%& is the $3500 for? Your agent sounds like a real gem, and you sound like you've got the word "sucker" tatooed on your forehead (no offense intended). If you are only going to stay 5-7 years, what do you want a 30 year fixed for? I obviously don't know your whole story, but if I were you I'd wait out the prepayment period, then get a 5 year ARM. What I really don't understand how you can save $600 a month with this new deal. Your fully amortized payment would be $3056 monthly. How can you be paying $3656 now? Exercise your options- that's what option arms are for. Best of luck to you and your bride-to-be.
Sit on it. Rates are low, and do not look like their going up soon so your arm is not going up. since you got it last year, it is probably close to what your new rate would be. You may as well stay with it for now. At least stay stable until after your wedding, believe me there will be more expenses than you see now. You can refinance later if rates start shooting up. If you happen to make it 2 years before that happens, you just saved 15 grand. If it makes you feel better, pay the fully amortized payment until then to see what your payments will be like.
Sounds like you should change companies. I can recommend 3 different loan officers for you to choose from.
I would check with eloan first, because they are running a promotion where they waive the lenders fees. An extra 3500 bucks cant hurt!! If you use this link http://www.tkqlhce.com/click-2177451-104... they will waive the lender fees.
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