15 yr vs 30 yr refinance

[Pearlbob]

Thank you so much, these are great points. When I first chose an ARM, I was 100% aware of the potential problems around it, and I knew I would not be getting myself into those situations. I guess with the recent problems in the market, I've worried myself too much.

You make an extremely good point - even if I did have to stay in the home for a year past when the ARM starts adjusting, would the amount I'd be paying extra per month really be more than the amount I would have to pay to refinance? Probably not.

I know there are so many factors involved that make it hard to answer the question, even for me to answer questions (how fast would my home sell, how much would it sell for, what will the % rate to up to once the ARM starts adjusting...)

And another good point - as long as I sell relatively soon after the rate starts adjusting, I won't have months and months of higher payments. I could save the money now and put it towards something else - like my car loan!

Thanks again. I like this forum a lot to get non-professional advice on things before the time comes that I will actually need to seek professional help.

Originally Posted by Daddys///M3

Ok, I misunderstood your post. As an aside, most people that are adamantly opposed to ARMS, although they may have their reasons, are likely not educated enough to know when an ARM can be a great tool. It sounds like, in your case, that it is an excellent option considering your short term goals and your current situation. Let's say hypothetically your ARM adjusted in 2010, and the payment went up $100 a month. Even if you paid that higher payment for a year, you may not break even against the closing costs and the higher rate and payment that would be associated with the refinance. In that case a refi would not make sense at all. It sounds like (and this is an assumption based on the information that has been given as well as the info that has not been given) your best bet is to stay in the ARM. I don't even know that I would throw any extra at the principal. Perhaps you could take the money you would be using to make extra principal payments and invest it somewhere.

[Daddys///M3]

Originally Posted by Pearlbob

Thanks again. I like this forum a lot to get non-professional advice on things before the time comes that I will actually need to seek professional help.

LOL, I actually am a professional as are many that responded.

[Pearlbob]

Good point - but at least you're free

Originally Posted by Daddys///M3

LOL, I actually am a professional as are many that responded.

[EANJ]

We are witnessing very turbulent times right now. That being said, I think you should be looking at "risk" in a very different way. Interest rate risk is one of the contributory factors in what we are seeing right now. Don't take for granted that is will be so simple to refinance "when" or "if" or at some point in time in the future. I hope your circumstances dictate you will always be able to, but all the planets have to align.

Also, in the 15 vs. 30 discussion, there are other factors to consider. The tax benefit and the quantification of same -- if that applies of course. The difference in the payment, at a cost of money factor perhaps, and what that is worth in 15 years. There's more as well. Good luck.