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

159 PARTICIPANTS SELECT ONLY ONE ANSWER
VOTE VIEW RESULT

comments

Want to comment? LOG IN or SIGN UP
TOP 24 Comments
  • Google
    Imystique

    Go to company page Google

    Imystique
    There is a 3rd option. Get 30 years fixed at 3%, I got it yesterday. If that reduces your outlay enough like me, you can buy a new property in 5 years and keep this one as investment property
    May 23, 2020 7
  • Google / Eng
    ABC-CEO

    Go to company page Google Eng

    ABC-CEO
    You got screwed by the bank. My rate is 3.25% 30yr fixed. Get a 7/1ARM below 3%. The current options suck.
    May 22, 2020 2
    • Google
      meme1

      Go to company page Google

      meme1
      It's different for refinancing, we just go 2.37 for 10/1 arm. But not possible for refinancing.
      May 22, 2020
    • Zyzyx
      Elon Tusk

      Zyzyx

      Elon Tusk
      7/1 ARM below 3% easily available for refi. I would do this as well.
      May 24, 2020
  • How is this even a debate? The fixed is a lower interest rate lol. If you need to lower monthly just do a 30 year fixed at nearly the same rate.
    May 22, 2020 2
  • Definitely get rid of the ARM loan. People with those loans will either have it paid before the fixed rate expires, betting the market will be better in X years, always plan to refi (barely ever paying principal).

    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.
    May 22, 2020 2
  • Oracle
    G86?bhak0

    Go to company page Oracle

    G86?bhak0
    I made that mistake and now regret it. But depends a lot on what you are doing with the extra money. If you invest it, you’ll notice you’re better off with the arm, especially that you’re only planning to stay 5 years. I think the 15 year is starting to be worth it when you actually stay in there for 15 year...
    May 22, 2020 0