5-year ARM coming due in 2010. When should I refi? (PMI, loan, interest rate)

[rcsteiner]

Hey, guys... Another question.

I have a 5-year interest-only ARM at 6.25% which turns variable in July 2010. The rate of the loan can adjust at that point to a new rate based on LIBOR+2.25% with various additional limitations (can only be adjusted every six months after that, max adjustment cannot be larger than 2% for any given period in either direction, total interest rate can never be greater than 12.25% or less than 2.25%, etc.).

My credit is decent enough (~720), though not stellar, and I realize that I can't get that low a rate now (probably) with a 30-year fixed mortgage. Or maybe I can through my credit union (something I'm going to be exploring fairly soon).

Anyway... Should I really care too much about looking into refinancing at this point? Or is the conversion point of my ARM far enough away that I can bury my head in the sand for a while.

[GregTraub]

I wouldn't worry about it too much if I were you. You still have a little over 2 years left.

Rates might have drifted downward a little lately, I'd say if you can now get a 30 yr fixed Interest only for 6.25%, you should refi. You never know where rates will be in the future, or how much your home will be worth (in case the homes value drops to a point where you now have a LTV above 100.)

[renriq02]

check out Penfed......they have a 5/5 ARM fixed at 5.25%.......

I'm a mortgage broker...but dont work for them....i still think that's a good deal.

Other questions may arise such as....are you paying PMI? what is your LTV? etc