home refi - 7/1 30 yr ARM @ 3.375% rate or go with 15 yr fixed @ 2.625%
May 22, 2020
24 Comments
i am consider seling house in 5 years and have 500k mortgage left. Current loan is 7/1 30 year ARM @ 3.375% rate. With interest rates down, i am considering refinancing and got a quote of 2.625% with smaller lender but with 15 year fixed loan, so i will end up paying more monthly mortgage, but less interest in longer run. Does it make sense to re-finance the house?
TC 400k
comments
Very very few reasons to ever get and stick with an ARM.
I'd go with a 30 year fixed but have a payoff schedule that will get you there in 15 to 20 years. Give yourself the flexibility in the future.
I refi a condo a 3.5 recently, my buddy did his house for close to 3. Money is cheap right now, you might even lower your current monthly payment.
Here is why the flexibility is important. If you want to move, renting your house on a 30 year vs 15 year is the difference of profit/breaking even vs taking a loss. What if you loose your job? Get hit by a car and go on disability etc...? Having that lower monthly payment is clutch.
There are also a lot of interesting strategies you can look into paying on loans faster. Get a personal loan and use that to make a dent into the principal, once that PL is paid, do it again, and again and again, etc... Depending on the PL interest rates you will save big.