Should I refinance now or keep my 5:1 ARM set to adjust this year?

Hi Willtu,It is good to have options. If it were me I would do the refinance now and here is why. Your current loan would most likely drop the full 2% later this year and you might even hold on to that rate for an extra year or 2. In the end rates will rebound and start going up. Let's say that your rate drops again next year to 4%. That is probably a best case scenario. You may hold that rate for a year and but once rate begin to go up your rate will continue to climb year after year for the remaining 23 years. Should you try to refinance later you may lock in a rate that is higher than the rate you would get today and have to pay the higher rate for those remaining years. If you choose to refinance now you would lock in a rate, depending on your situation, in the high 3's or low 4s for a Fannie HARP and low 4s for a Freddie HARP. I think 4.5% may be a bit high but I also do not have your whole situation. So you would be locking in the best rate for the longest time period. I do agree that looking for a 20 year or 15 year might be beneficial for you and would be happy to run the analysis on those numbers. The 25 year Harp loans do not save you anything in rate over a 30 so It may not be of benefit to you. If you would like I live in NH just over the boarder and a large percentage of my business is Vermont loans so I understand your market and your area. Including Montpelier. I would be happy to visit you at your home or somewhere local to you and we can discuss your options in person. My direct line is 603-543-3700 ext 1.Thank you in advance for the opportunity to serve you!Don LaPlume

This is how I see it... you owe nearly double what your property is worth, so if your intent is to keep the property, you will have it for a long time... you can refinance now and get 4.5%, or you can roll the dice and "Maybe?" have an even lower payment the 2nd year, but with the potential of a higher payment looming above? I would refinance now.. Take the lower payment.. if you concern is that you're losing the first 5 years of payments, then do a 20 year or 15 year mortgage.. The rate will be even lower, and your payment will still be lower than your paying now... if you contact a competent loan officer, it's very easy for him to put together a "Total Cost Analysis", which will give you a written, clear picture of what your benefits would be to refinancing now. So The best advice I can give you is to contact a LOCAL mortgage broker, not the local "Big" bank, and certainly not one of those 50 states internet lenders...By applying with your LOCAL Broker, you have an advantage because he's familiar with local customs and works with numerous lenders, seeking out the best loan terms for your particular scenario. Because he has lower overhead, he can offer you lower rates and lower fees than most of the larger lenders.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

If your current loan is HARP eligible, then taking advantage of this opportunity while it is here probably makes the most sense. Based on your numbers it is likely that rates will rise before you have equity again. If you intend to keep the property for a while and it sounds like you are, then think of it this way. Refinance now into a 30 year at 4.5 (about the same that you will adjust to) as insurance. Yes, it is possible that the rate could adjust further next year, but I'm only betting on rates remaining this low for another 1-2 years, 3 at the most. I hope I'm wrong, but we really don't know. Are you willing to risk the possibility that maybe you could get a better rate next year for the certainty that eventually the rate will rise enough eat up all your savings? I wouldn't. If your concern is starting the 30 year clock over, It's a simple calculation to determine how much extra you need to pay to principal each month to make it a 25 year loan and you'll be surprised how little it really is. In fact, if you were to keep paying the same payment you are paying now with the lower rate, it is likely that the new loan could be paid off in closer to 20 years. Finally, DO NOT, DO NOT, DO NOT use the lender you are currently making payments to. Daily I receive calls from people that started with their current lender only to find out when they were ready to go to escrow that the low fees they thought they were getting more than doubled and in some cases tripled. Start with a local Mortgage Banker/Broker. You'll get a better deal because we have access to all the major players and can place you with the investor (bank) with the best rate/fee combination. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ www.LoansA2z.com 888-889-9950

I can do your harp loan, and my closing costs are only $895 for processing and underwriting, and your title fees and escrows which are your impounded taxes and property insurance, and I do not have all of the bank overlays that make you jump thru hoops, and depends on your credit, I am getting people around 4.375% with out points. my email is yourloanpartnerforlife@live.com linda

I agree with those telling you to go ahead and refinance, whether with your current lender or another lender who might offer lower costs or rate. 4.5% isn't great but there are lots of factors that can affect the rate. I love Monpelier, have a good friend in the area... Good luck!