Question by ssk402000: I have a 5 year ARM mortgage and i need advice on refinancing to a fixed rate mortgage?
When I bought my house it was worth 291,000 where I made a down payment of 20,000 and now I am having an appraisal getting done and with the housing market as it is, i’m sure its worth much less. I originally had a 5 year ARM mortgage at a 5% rate but am now looking to refinance to a longer fixed rate mortgage. What are my options?
Answer by Biggie @ Arbor Mortgage
You may be fine putting 20k down on the loan, but how long have you been in the home? Is it @ the 5 year mark? You should consider an FHA 30 year fixed because they will refinance your home up to 97.75% of the value for a rate & term mortgage.
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If you have enough time left on the mortgage, you could ride it out until the market comes back. Not really able to give advise unless we know how long ago you purchase the home, what the current value is. With an assumption you purchased the home with in the last year, and you’re in a declining market, you’re probably up side down.
5% rate is a great rate. If you can wait out the market, wait it out.
Call your mortgage servicer. The LIBOR index is DOWN. Your rate may not adjust UP! Or not very much. Find out what the current MARGIN and INDEX are on your current mortgage.
As long as the LIBOR stays low (which won’t be for more than say 2 years) it might be better keeping your current mortgage.
It may not be worthwhile to pay refi closing costs to get a somewhat higher fixed rate. Today’s rates are 6.5% 30yr fixed on FHA 97.75% refis today (600+ credit).
Best of luck!