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Does Refi into an ARM ever make sense?

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  • Does Refi into an ARM ever make sense?

    Here is my thought. Current mortgage is 3.875 % fixed rate 20 yr jumbo. Starting 2nd yr of payments Jan 2021. Will have it below jumbo rate in 3 more yrs with current extra principle being thrown at it. Was thinking at that point that an ARM of 7 yrs would give us the best rate and most flexibility to pay. Plan is to fully pay house off before 2030 going into retirement. Putting double principle payments towards it now. Not too familiar with ARM mortgages. How is amortization calculated on these? Is there a ton of interest payments in the 1st few years? Just thinking out loud and starting to devise a plan of attack. If I continue as is with existing mortgage and extra principle, it will be paid off in 9 yrs and 3 months from now.

  • #2
    If you're already planning to pay off the mortgage before it's up then it is definitely an option. Honestly, I'm not sure if the ARM rates are any better than many of the fixed rates at this point but that could change in 3 years. The fixed rate would give you some more flexibility but it all depends on what you want and what your goal is.


    • #3
      I refid to a 5yr arm bc i was happy w the rate and it was easy through local bank holding the mortgage wo an appraisal and I plan to pay it off anyway