Q. In 2002 we refinanced from a mortgage with a 6.25% interest rate to a 7-year ARM at 5.375% to lower our monthly payments. We also expected that we would sell before the seven years are up in August 2009. But we are not going to sell after all and are now concerned that by the end of this particular loan we may be trapped into paying higher rates that will certainly increase our monthly payment on approximately $70,000 mortgage balance. Should we refinance now into a fixed-rate loan?
A. You have a really great rate for at least another 2 1/2 years. If you refinance into a fixed-rate mortgage now, youâ??ll pay at least a half-point more. So why not wait and see what happens with mortgage rates over the next year or so?
Chances are good ��" better than 50-50 according to many economists -- that rates will fall between now and when your ARM resets. The very affordable 5.375% rate youâ??re currently paying gives you the luxury of waiting to see what happens.
By: home-equity.interest.com
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