Should I switch over from an ARM to a fixed rate mortgage?

Question

Currently my ARM has rocketed to 7.3% and I have PMI to boot.

At what point is it, or is it not, viable to switch to a fixed rate option somewhere in the 6% range.

My refinance loan ammount would be approx 400K.

Answer 1

When did the ARM portion expire? It is never good to let the ARM expire without locking in a fixed rate, the new rate is almost always higher than the initial rate, which is typically above the current rates for a 30 yr fixed, or even another similar ARM. How long ago did you get this loan? What percentage of equity do you have in your home (PMI falls off after 22% ownership, but you can request to have it removed after 20% owenership)? These are all questions your mortgage person should be asking you. I am a mortgage BANKER and am more than willing to help out if you have any questions. Feel free to email me for further guidance.


Edit: JPN I am trying to reply to you but YAHOO says your email has not been confirmed, please email me at my office... [e-mail]

Answer 2

It would probably be to your advantage to switch to a fixed rate.

Two things to consider:
1.) How long do you plan on staying in the house? If you are moving soon, it may not be worth the expense to refi.
2.) Can you lock in at a good rate? If you can get the 6% you mentioned, that would be a big savings.

Also, be sure you understand the restrictions in any new mortgage you sign up for. Pay special attention to any prepayment penalties that would make it impossible or expensive to refinance again if rates fall.

Answer 3

Switch to a fixed rate NOW. Rates have been coming down in the last few months (lucky for you) and you should be able to get the rate locked in around 6.5% or less. If your house has appreciated, you may have 20% equity in it now and can get out of the PMI rip-off. 400K is below a jumbo loan, so that will save you some too.

Answer 4

jpn72,

You should refinance out of your adjustable ASAP!!!

Rates are on the rise again... By this time next year rates will have sky rocketed to 8%!!!

It sounds like your ARM has already reached it s adjustment point.. Ideally you should have refinanced before that happened..

You stil have time as you said to get in the 6% range,a nd get it fixed so that you never have to refinance again (with rates gong up, your not going to want to..)

The question you should be askign is not should you refinance, but where should you refinance? What bank/lender will be able to offer you the lowest rates/fee's?

Here is what i advise to every single one of my clients..

Work with a loan oficer that is partnered with MULTIPLE INVESTORS OR LENDERS...

There are a couple reasons i suggest that..

1. If a loan officer can shop your loan to multiple lenders they are bound to find many that are willing to lend to you. By looking at multiple options and programs you will be sure to find the lowest costs and rates...

2. If you on your own call multiple banks to see what you qualify for, EACH AND EVERY LENDER will HAVE to pull a seperate credit report. The more times it is pulled the worse your credit gets. Now, when you work with a loan officer that can shop among their investors, they only have to pull one credit report, and use that copy to shop mortgage lenders for you.. As im sure you know, these days everything in life seems to depend on the credit score that you have... Keeping it from dropping is very important for every consumer..

So not only do you keep your credit score where it is, you dont have to worry about any of the busy work..you let the loan officer do it for you..

The most important thing to realize is that I as the loan officer with multiple investors to work with, am fully willing to keep shopping to different companies to find the best program for your needs.

My name is Jason Fry, and I am a loan officer with Providential Bancorp, a nationwide mortgage lender. I'd be happy to assist you in refinancing , or at least be able to let you know exactly what YOU QUALIFY FOR. You can then make a more informed, and educated decision whether it would be the right move for you.

Feel free to give me a call at 312-264-6448, or
you can email me at [e-mail].


Thank You,

Jason Fry
Licensed Mortgage Banker
Providential Bancorp
312-264-6448

Answer 5

the Frist question is when did you plain on selling our house?
if 2 years or more you should lock in you payment. if less the 5 years you should do a new ARM. If longer you should do a fix. But with out talking to you it is hard to said.

Answer 6

The only reason to have an ARM is because the interest rate is lower than a fixed. When that no longer is true it is time to get a fixed.

Answer 7

Don't be in a rush. We could easily see rates come down a bit in the near future if housing doesn't get cooking again. But if you don't want to wait, go ahead now. It could cost you more to wait 6 months if your rate went that high already.

Answer 8

You should refinance ASAP.
Rates are still relatively low, and now that your ARM's fixed portion is over it will only surprise you.

Get started here. to figure out how much equity you got, and what kind of packages will be available in your area.

http://loans.savingslife.com

Good luck with it!

Answer 9

Talk to your lender. A lot of talk has been going on-negative about ARM's. They will tell you the details.

Answer 10

You should refinance as quickly as possible.