Refinancing our hous

Avatar for 2locachicas
iVillage Member
Registered: 05-14-2003
Refinancing our hous
3
Fri, 04-14-2006 - 11:56am

We are looking into refinancing our house. We need to. We are on a 1/1 arm. right now we have a good rate but if it goes up next year it will be super high....and I feel 100% certain rates are going to continue to go up. So we need to refinance this year.

We are looking at a 5/1 that is at 6% there are closing costs but they are pretty low and if rates DO go up we will more than save our closing costs on interest next year alone.

I know some other people out there recently refied and are buying so I was wondering what kind of rates you are getting, who you are using, what we need to know. We like the 5/1 arm because we know we willbe gone in 3 years or less and the rates are more attractive.

Thanks!!

iVillage Member
Registered: 12-12-2004
Fri, 04-14-2006 - 6:21pm
HI, 2locachicas--Well, when DH and I did the refi, it saved us on the taxes this yr (mostly). We had an ARM that would go up every month for 15 months (tied into what feds were doing). It added about another $400/month on the mortgage, and put us dangerously close to the brink. So, we went to Chase (our mortgage was sold to them) and we have a fixed rate at 5.875%, 30 yr loan, includes property taxes. Today, there was an article on the US treasury yield to highest point in 5 yrs, tied to mortgages. The article went on to say that folks with ARM's could see a jump of 3-4% of percentage points in the near future. An example was given: $400K mortgage, with increase of $1000/MONTH tied into those ARM's. Can you imagine--another $1000/MONTH, without it going toward the principle. This is interest, girlfriend, interest. Got one of those loan offers in the mail again--30yr ARM on the bal , rate 1%, ARM 6.636%, would lower it by about $1000/month, but are you kidding??!! If those interest rates keep creeping up each month, like they've been doing the last 2 yrs, a lot of folks with those low-interest ARM's are going to be in big trouble. Not seeing the principle come down for years. JMO. WHiz.
Avatar for 2locachicas
iVillage Member
Registered: 05-14-2003
Fri, 04-14-2006 - 8:31pm

Whiz-

I might not have a clear understanding of what an arm is. If we get a 5 year arm doesn't that mean we will have the same interest rate for 5 years? We know we are moving within the next 3 years so if that is the case it would work well forus.

If you(or anyone) can clarify what a 5/1 arm is I would appreciate it. We are on a 1/1 arm right now and our interest changes every year....

iVillage Member
Registered: 01-25-2006
Fri, 04-14-2006 - 8:45pm

You're right 2loca, a 5/1 ARM would provide you the fixed rate for the next 5 years and then the rate would change after that. 5/1 ARM makes perfect sense since you fully intend to leave that house in 3 years. The issue Whiz is referring to is that lots of people used ARMS to qualify for their homes and intend to stay. They are going to be in big trouble if they can't afford their payments at the higher interest rate. I'm in a 7/1 ARM and fully intend to be out of this house before the fixed rate expires.

Peg