No Closing Cost or 5/1 ARM Refi? (loan, fixed rate, interest, fee)

[Ninasimonejr]

We're thinking of moving soon but aren't sure but don't want to miss out on the low rates. Our house has lost a lot of value in the past year (21%) so we only seem to qualify for one program, DU Refi Plus.

It seems like a no-closing cost refi with a higher interest rate (5.25%) is a pretty good option for us if we do move in the next year or two. (We currently pay 6% so we'd save around $350/mo.)

OTOH, maybe an ARM is what we want in this kind of situation. Any advice? Thanks!

[dad2jules]

The only loan structure you should look at is no closing cost because of the possibility of moving in the next year or 2. You can't go from a fixed rate to an ARM under Refi Plus- only a more stable product not a riskier one. Make sure nothing is being added to your loan balance and calling it no closing costs.

[VictorBurek]

I agree... if you are going to be there less than a year or so, only do a no cost loan. But be prepared to pay appraisal fee out of pocket.

Also, 5/1 ARMS do qualify under the DU refi plus program. So you can do a fixed to a 5/1 ARM using that program

[Ninasimonejr]

Thanks for the responses. Do you think 5.25% is a decent rate for a no-closing cost loan?

[VictorBurek]

Yes.. However, rates took a beating today and i doubt you will be able to get that rate now.

But if the refinance is free, you might as well do it but expect a rate of 5.375 to 5.5% now.

[Ninasimonejr]

Thanks!