mortgage refinance

[tulak]

The timing isn’t great, but it looks like I might need to refinance my mortgage.

I’m debating between two options: a 5/5 ARM or a 30 year fixed mortgage. Let’s say there’s about a 30% chance I’d sell within the next 10 years.

The 5/5 ARM is at 4.25 and the 30 year at 4.75. Assume the closing costs are about the same.

Which would you choose?

 

[HarveyS]

Fixed- rates are going nowhere but up. If I'm wrong, you can refinance later.
I'd look at 15 or 20 yr.

 

[Scuba]

I’d take the 4.75% 30 year fixed. Still a low rate by historical standards and the 0.5% difference for the ARM is not enough of an incentive to take the risk. Also, if there is only a 30% chance you’ll sell in the next 10 years, no reason not to lock in a low-ish rate.

This answer assumes you think you can earn more than 4.75% on your investments; if not, you could consider paying off part of all of your mortgage.

 

[DrRoy]

Fixed- rates are going nowhere but up. If I'm wrong, you can refinance later.
I'd look at 15 or 20 yr.

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