ARM question/ Refi

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Topic Author
lospecv
Posts: 47
Joined: Sun May 05, 2013 6:46 pm

ARM question/ Refi

Post by lospecv » Fri Mar 06, 2020 10:53 am

my 3/5 arm is going to reset in next couple of months and wondering if i should keep or refi to a 30 year. I plan to sell in the next 4-5 years..

current rate is 3.62500

my arm says its uses the weekly average yield u.s. treasury securities...I have no idea what this is or how to check current rate.

Would it be wise to refi or just keep the arm?

Silk McCue
Posts: 4667
Joined: Thu Feb 25, 2016 7:11 pm

Re: ARM question/ Refi

Post by Silk McCue » Fri Mar 06, 2020 11:30 am

I really don't know this stuff but when I look up treasury rates for Feb 2017 and compare them to 2020, the rate was almost a full point less in 2017. That would suggest that your rate could be going up on the renewal.

You could certainly call the mortgage company and ask.

https://www.hsh.com/mortgage-rates/arm- ... alues.html

Cheers

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unclescrooge
Posts: 4886
Joined: Thu Jun 07, 2012 7:00 pm

Re: ARM question/ Refi

Post by unclescrooge » Fri Mar 06, 2020 12:10 pm

lospecv wrote:
Fri Mar 06, 2020 10:53 am
my 3/5 arm is going to reset in next couple of months and wondering if i should keep or refi to a 30 year. I plan to sell in the next 4-5 years..

current rate is 3.62500

my arm says its uses the weekly average yield u.s. treasury securities...I have no idea what this is or how to check current rate.

Would it be wise to refi or just keep the arm?
You'll need to ask your mortgage company, as there is probably a margin on top of the index rate to figure out your loan.

If you wanted the stability of knowing the rate, and were certain to still in 5 years, you should refi into another ARM using a no cost loan. Not a loan where the costs are added to your loan balance, but a loan where the lender credits the cost in exchange for a slightly higher rate. There is a good chance this will be lower than your existing rate.

DVMResident
Posts: 1481
Joined: Mon Aug 01, 2011 8:15 pm

Re: ARM question/ Refi

Post by DVMResident » Fri Mar 06, 2020 12:12 pm

Yes, you should refi.

You should not refi to a 30 year fixed. With <5 years to when you sell, you are a good candidate for a 7/1 ARM to lock in another 7 years of low interest. A 30 year fixed will cost you a lot of interest due to most of the interest being paid in the early years*.

If you’ve already maxed out tax advantages space, you may consider extra principal payments. A 3.X% return for a 5 year duration is competitive.

* Technically interest is not front loaded but the amortization schedule has the same effect.

Hyperchicken
Posts: 302
Joined: Mon Mar 02, 2020 5:33 pm

Re: ARM question/ Refi

Post by Hyperchicken » Fri Mar 06, 2020 12:14 pm

lospecv wrote:
Fri Mar 06, 2020 10:53 am
I have no idea what this is or how to check current rate.
If you talk to the lender, will they tell you what the rate is going to change to?

Topic Author
lospecv
Posts: 47
Joined: Sun May 05, 2013 6:46 pm

Re: ARM question/ Refi

Post by lospecv » Tue Apr 21, 2020 9:54 am

**update**

Navy Federal just updated my account so i now know my rate. Very happy i did not refinance and just waited for it to reset. I'm good for the next five 5 years!!

Anyone else with an arm resetting soon will be happy with new rate.

Next Scheduled Interest Rate Change Date 07/01/2020
Next Interest Rate 2.50000%
Next Scheduled P&I Change Date 07/01/2020
Next Scheduled P&I Payment $1,039.79

Almond
Posts: 87
Joined: Wed May 01, 2019 3:11 pm

Re: ARM question/ Refi

Post by Almond » Tue Apr 21, 2020 3:13 pm

lospecv wrote:
Tue Apr 21, 2020 9:54 am
**update**

Navy Federal just updated my account so i now know my rate. Very happy i did not refinance and just waited for it to reset. I'm good for the next five 5 years!!

Anyone else with an arm resetting soon will be happy with new rate.

Next Scheduled Interest Rate Change Date 07/01/2020
Next Interest Rate 2.50000%
Next Scheduled P&I Change Date 07/01/2020
Next Scheduled P&I Payment $1,039.79

Is that rate fixed for one year. Do terms remain the same such as interest only?

Topic Author
lospecv
Posts: 47
Joined: Sun May 05, 2013 6:46 pm

Re: ARM question/ Refi

Post by lospecv » Wed Apr 22, 2020 3:39 am

Almond wrote:
Tue Apr 21, 2020 3:13 pm
lospecv wrote:
Tue Apr 21, 2020 9:54 am
**update**

Navy Federal just updated my account so i now know my rate. Very happy i did not refinance and just waited for it to reset. I'm good for the next five 5 years!!

Anyone else with an arm resetting soon will be happy with new rate.

Next Scheduled Interest Rate Change Date 07/01/2020
Next Interest Rate 2.50000%
Next Scheduled P&I Change Date 07/01/2020
Next Scheduled P&I Payment $1,039.79

Is that rate fixed for one year. Do terms remain the same such as interest only?
It was a 3/5 arm to start back in 2017 when i bought house. this is first reset and its good for 5 years. Its not interest only.

dukeblue219
Posts: 718
Joined: Fri Jan 29, 2016 12:40 pm

Re: ARM question/ Refi

Post by dukeblue219 » Wed Apr 22, 2020 5:47 am

lospecv wrote:
Tue Apr 21, 2020 9:54 am
**update**

Navy Federal just updated my account so i now know my rate. Very happy i did not refinance and just waited for it to reset. I'm good for the next five 5 years!!
Yep, you timed this very well! If you'd bought the house a few months earlier in 2017 you'd have a different story. Luckily rates are very low now, but a lot of people can't get a refi period. With the ARM, the rate adjustment is automatic so you're not waiting for a mortgage bank to get to your paperwork in the queue.

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