### Trying to understand basics of refinancing

Posted:

**Tue Aug 13, 2019 4:05 pm**I am a novice and trying to understand/evaluate if I should refinance my home loan and what parameters should I consider when refinancing.

I bought this house about 2.5 years ago with 7/1 ARM loan.

We like the house and do not see selling it for next 5 to 10 years atleast. I am not sure if would be my retirement house as it is in HCOL area.

While refinancing, should my goal be:

1) to minimize the total amount that I shell out to bank ( so going for a shorter loan period)?

2) to eliminate the uncertainty of new interest rate after my 7/1 ARM period is over?

3) to minimize the monthly payment so I can invest more in 3 fund portfolio?

4) Also, regarding closing cost and points, I could not understand why agents bring this into consideration. For ease of calculation, should I compare only 0-point, 0-cost options, so I can easily compare numbers for 2 loans side-by-side.

5) Generally trying to understand, Fed has been raising interest rate for last 10 years now ( except the last month). Then why does news say that interest rates are lowest. Shouldn't it be highest over the last 10 year period?

Loan date: March 2017

Loan amount : 640K ( as of today)

Interest rate: 3.125%

Loan type: 7/1 ARM

Term in years: 30

I was trying to look for wiki page for this, but couldn't find any.

I looked at few previous threads on refinancing topic, but I got lost in terminology (like what is break-even point?)

Thanks for your time reading this post and would appreciate your thoughts and insights.

Have a nice day.

**To give some background:**I bought this house about 2.5 years ago with 7/1 ARM loan.

We like the house and do not see selling it for next 5 to 10 years atleast. I am not sure if would be my retirement house as it is in HCOL area.

**My questions:**While refinancing, should my goal be:

1) to minimize the total amount that I shell out to bank ( so going for a shorter loan period)?

2) to eliminate the uncertainty of new interest rate after my 7/1 ARM period is over?

3) to minimize the monthly payment so I can invest more in 3 fund portfolio?

4) Also, regarding closing cost and points, I could not understand why agents bring this into consideration. For ease of calculation, should I compare only 0-point, 0-cost options, so I can easily compare numbers for 2 loans side-by-side.

5) Generally trying to understand, Fed has been raising interest rate for last 10 years now ( except the last month). Then why does news say that interest rates are lowest. Shouldn't it be highest over the last 10 year period?

**Details about my loan:**Loan date: March 2017

Loan amount : 640K ( as of today)

Interest rate: 3.125%

Loan type: 7/1 ARM

Term in years: 30

I was trying to look for wiki page for this, but couldn't find any.

I looked at few previous threads on refinancing topic, but I got lost in terminology (like what is break-even point?)

Thanks for your time reading this post and would appreciate your thoughts and insights.

Have a nice day.