Refinancing Timing

[inquisitive]

For those with ARMs or interest-only loans, how do you decide when to refinance? Do you pay attention to the LIBOR on a weekly or monthly basis and when it gets low enough refinance?

Also, how do you get the best interest rate? Is it possible to get the national average rates that bankrate.com publishes on their website every day?

I am entering into a 5/1 ARM right now and while I could wait 5 yrs to refinance wouldn't it make more sense to refinance in the 3rd or 4th year, perhaps to a 30 yr fixed or a new 5/1 ARM?

 

[DblDoc]

I don't think you will find many on this board that have either of those flavours of mortgages. Given we are seeing some of the lowest rates ever I wouldn't hold my breath for lower rates 3-4 years down the road...

DD

 

[OAG]

Actually, we have a 15 year interest only HELOC that is adjustable at -.5 on the Prime Rate (currently paying 2.75%, before tax deduction). We do have the cash to pay it off but as long as we can get an after tax rate that beats that we plan to keep it.

Currently, I believe PENFED (www.penfed.org) has the best rates for fixed or adjustable mortgages.. You can join, if not otherwise qualified, for a $20 membership as indicated on their web site.

BTW I would take Bankrate information with a "grain of salt" - they tend to ignore credit unions which IMO have better rates (both mortgages and savings).

 

[ChrisC]

I have two interest-only 5/1 ARMs; took them out in 2006, each with different interest rates and each has different interest only periods. (One has a ten-year interest only period). Both of them re-set rates at 2011, initially, at 275 BP above one-year Treasuries, which are now at .75 percent; I'm looking at refinancing (and thus paying down principle to get in line with LTV standards)) one and floating with the other one, unless rates begin to jump on me the next few years.

I think there are so many invidualized considerations about refinancing these products that it makes little sense to generalize. Here's a decent article that I found helpful about interest-only ARMs. The Principal Facts of Interest-Only Mortgages - HSH Associates Library of Mortgage Information

 

[al_bundy]

there is no way you could convince me to take out an ARM loan now with rates so low the government is literally paying the banks