Refi 5yr arm yes no

[Raygun99]

OK Looking for a 2nd opinion. Quickly I have a 350K home with 200K left to pay 25 more yrs at 5.25% . I want it paid off in 5 years prior to SS. If I re-fi on an ARM I might get 3.5-4% zero points. Lower the interest and make same or larger payments over the next 5 years with balloon to pay at the end. I have the money in 401K that has regular tax load but no penalty to make these payments. I estimated saving aprox 10K per year in interest for 5 years.. Is it a sound plan?

 

[Brat]

I wouldn't want to be tied to a baloon payment, if the contract recalculates your payment at each reset it might work. None of us knows what the future holds, most have a max 2% increase at reset.

 

[calmloki]

OK Looking for a 2nd opinion. Quickly I have a 350K home with 200K left to pay 25 more yrs at 5.25% . I want it paid off in 5 years prior to SS. If I re-fi on an ARM I might get 3.5-4% zero points. Lower the interest and make same or larger payments over the next 5 years with balloon to pay at the end. I have the money in 401K that has regular tax load but no penalty to make these payments. I estimated saving aprox 10K per year in interest for 5 years.. Is it a sound plan?

if you go from 5.25% to 4% on $200k isn't it more like $2500 interest savings/year? Not that that's to sneeze at....

I'm thinking of PenFed's 5/5 4% ARM - resets once at the end of 5 years and for no more than 2% - been thinking about it myself, but my 4.99% current PenFed loan doesn't qualify for a refi - Drat!