Question by mshep: I have a five year fixed mortgage (5%) that will adjust in 2010, when should i think of refinancing?
Answer by italsteel1
A 5% interest rate is an excellent rate…I am assuming it is a negative amortization loan with that kind of rate. If is is not neg am. dont refinance. You still have a couple of years to get it done. I would start the refinance process amount 6 month into the 2009 year. If it is negative am loan….aka option arm loan…refinance now, because if you are only paying a portion of the interest only on the loan the remaining portion will become principal.
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I would say that you should look into a refinance closer to the time that your rate will adjust, and you can assess how the rates are at that time. Also, check out if your loan has a prepayment penalty. This may dictate when you can actually refinance without a penalty.
Closer to 2009 start checking rates and see if you can do a loan modification. Costs like $ 750 and you sign literally 4 docs. They just change your rate from an adj to a fixed rate loan sometime they’ll even lower your principle amount according to how much you’ve pd. No appraisal and title pd for by you.
A 5 yr arm at 5% hmmm…sounds like there was a catch to it.