Mortgage arm wrestle. (Ask Your Advocate).Q I refinanced my mortgage about two years ago with a seven year ARM. Would it make sense for me to refinance for a fixed 30- or 15-year loan? Or just wait until the 7-year ARM expires?--G. Brown Via Internet A An ARM--short for adjustable rate Adjustable rate Applies mainly to convertible securities. Refers to interest rate or dividend that is adjusted periodically, usually according to a standard market rate outside the control of the bank or savings institution, such as that prevailing on Treasury bonds or notes. mortgage--means that the mortgage rate is flexible based on current market interest rates. They are, however, usually lower than a fixed mortgage rate. And so, if mortgage rates are high, you can secure a lower interest rate. But after the set term--in your instance seven years, the Years, The the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109] See : Time rate will increase. Arms best serve someone who plans to own the home five years or less. That's the only way you would benefit from a lower interest rate. Refinancing now and then moving before the seven-year period is up will cost you. The fees and closing costs Closing Costs The numerous expenses (over and above the price of the property) that buyers and sellers normally incur to complete a real estate transaction. Costs incurred include loan origination fee, discount points, appraisal fee, title search, title insurance, survey, taxes, to refinance would cancel any savings you would have from a lower interest rate. Your inquiry, however, indicates that you are a not a short-term homeowner. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Matthew King II, president of MK Capital Resources L.L.C. in New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. (www.mkcap italresources.com). "If you plan to stay in the house seven years or longer, it would be worth it to refinance to a 30- or 15-year fixed mortgage rate at 6.5% with 0 points. You could even get a lower payment if you added points." Even if the payments on a fixed mortgage rate are higher than what you're paying now, King says it would be better to lock-in a fixed rate while interest rates are low rather than possibly paying a higher rate after the seven-year period of the adjustable mortgage rate has expired.--Sonia Alleyne Mail your consumer empowerment questions to Ask Your Advocate, BLACK ENTERPRISE 130 Fifth Ave., New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , NY 10011 or send an e-mail to alleynes@blackenterprise.com. |
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