Should i switch to a 15/1 fixed mortgage

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Topic Author
vanpan
Posts: 50
Joined: Thu Aug 03, 2017 5:52 pm

Should i switch to a 15/1 fixed mortgage

Post by vanpan »

Some info on us

wife and me in early 30's

Current outstanding mortgage amount - 340K
Monthly payment - 1450 + 1 pay an extra 500 every month towards the principle ( total 1950)
current home value: 1.2 M
I am on a 7/1 ARM @ 2% and the ARM rate ends in Nov 2019

I am thinking should I change to a 15/1 fixed now. Get rates around 2300 per month at 2.78%.

Current finances -
The pay we get every month after maxing both our 410K's as well as espp ( around 15K every 6 months) and after paying state and federal taxes is about 14K

Also, we make roughly 100K before taxes in RSU's every year. Mostly sell these and convert 1/2 to fstvx and another half to some FANG stocks.
We put 6500 into FSTVX in a taxable account every month.
Our cars are paid off and the rest of the money mostly goes towards expenses ( mortgage + insurance + school tuition for son (1700 a month) + food + entertainment).
Other expenses: we spend roughly 5K a year on travel. My property tax is not with my mortgage, so I pay another 10K in property tax every year.

Currently have 310K in retirement accounts ( IRA + 401K) and 450K in taxable accounts ( FSTVX 1/2 , FANG 1/2) and 100K cash.
We dont plan on slowing down putting money into fstvx every month, rather we will deplete our cash by 500$ every month to make up for the increase in the mortgage.


Should i bite the bullet and change to a 15 year fixed or should I wait out the 2 years of my low mortgage rate?
ShowMeTheER
Posts: 511
Joined: Mon May 24, 2010 9:12 am

Re: Should i switch to a 15/1 fixed mortgage

Post by ShowMeTheER »

If you can really get 2.78% w/o crazy closing costs that seems like a wise way to go in my opinion. Would also appreciate if you would mention where that rate is from.
ETadvisor
Posts: 328
Joined: Tue Jul 04, 2017 1:37 pm

Re: Should i switch to a 15/1 fixed mortgage

Post by ETadvisor »

vanpan wrote: I am on a 7/1 ARM @ 2% and the ARM rate ends in Nov 2019

I am thinking should I change to a 15/1 fixed now. Get rates around 2300 per month at 2.78%.

Should i bite the bullet and change to a 15 year fixed or should I wait out the 2 years of my low mortgage rate?
I did. I was on a 5/1 ARM @ 2.8% to 2020. I fixed the rate to 30 @ 3.5%. I asked myself how would i feel if the rate increased 2 to 3 bps in 2020 and "bit the bullet".
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jimb_fromATL
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Joined: Sun Nov 10, 2013 11:00 am
Location: Atlanta area & Piedmont Triad NC and Interstate 85 in between.

Re: Should i switch to a 15/1 fixed mortgage

Post by jimb_fromATL »

How much are the closing costs?
Will you pay them up front out of pocket or roll them into the loan?
How long do you expect to own the home?

What are the caps for each change and the maximum rate?
What index does the current mortgage follow?

What index, and what are the caps on the new loan?

The problem is that you're guaranteeing to pay several thousand dollars more interest on the new mortgage than you will on the current mortgage between now and the first adjustment.

So ... you'll need to live in the home for some time past the first rate adjustment, and have the rate go up substantially before the savings for the higher 2.8% rate can make up for the closing costs and lower rate of the current mortgage. Unless you're going to live there several years, and unless the current rate goes up substantially, you may never catch up.

jimb
Topic Author
vanpan
Posts: 50
Joined: Thu Aug 03, 2017 5:52 pm

Re: Should i switch to a 15/1 fixed mortgage

Post by vanpan »

ShowMeTheER wrote:If you can really get 2.78% w/o crazy closing costs that seems like a wise way to go in my opinion. Would also appreciate if you would mention where that rate is from.

I got this rate from sebonic financial (https://sebonic.com). 0 points, 0 fees.
ShowMeTheER
Posts: 511
Joined: Mon May 24, 2010 9:12 am

Re: Should i switch to a 15/1 fixed mortgage

Post by ShowMeTheER »

Thanks. Any experience with them? Certainly head and shoulders above other refi all-in costs these days. Their Yelp reviews (Cardinal Financial) leave much to be desired but Yelp tends to draw the unhappy rather than the happy.
nukewerker
Posts: 234
Joined: Sun Feb 17, 2013 7:46 am

Re: Should i switch to a 15/1 fixed mortgage

Post by nukewerker »

We refinanced with Sebonic/Cardinal last year and have not had any issues. I think all we paid for were the attorney fees and appraisal. I'm not sure why people are unhappy with cardinal. You just login to their webpage and pay like everyone else.
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