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The Bus 10-09-05 10:17 PM

Originally Posted by Thor Simpson
Thanks for all the help everyone... It's good to hear that my thoughts were pretty much in line with what we can do. Sorry if I sounded "a bit crazy" ... I'm pretty new to loans in general.

I'll keep all your suggestions in mind when we look to do this. We will definately wait for the house 2 doors down to close, and are most likely looking to refinance in 2-3 months (Being self-employed, I need to get some more liquid funds in the bank regardless of what the fees will be). We are <i>probably</i> going to be in the house another 3-5 years, so I'll be sure I do the math and make sure we come out alright in the long run. Another ARM is definately an option... but I hate to be tied in to it in the event we end up staying more than 5 years, or facing another refinance when rates are potentially much higher. Interest rates in 5 years could be a very different picture than we are looking at today, and I don't think anyone would suggest that they would be lower. On the other hand... no sense in throwing money away if we're going to move in 3 years. So... I guess we have some talking to do about our timeframe as that could greatly affect our loan selection.

Thanks again.

Thor: If it is most likely you will be moving in less than three years, it is unlikely you will find something with a huge benefit.

If it is most likely for you to move in the next 3-8 years, get something like a 5- or a 7-year ARM.

If it is most likely for you to move in a decade or more (2015, once you're well into your 30s), then get a 10-year ARM or a 30-year fixed (or 20-year fixed if you can handle the higher payments).

If no option saves you enough money, then don't do anything.

Th0r S1mpson 10-09-05 10:51 PM

Well, the main reasons I feel the need to refinance are:

1) We will likely go past our 5 year ARM. But possibly not more than a couple years. Still, who knows what the rates will jump to at that point. It could simply be more than we can handle. We didn't think we'd be in this house even 5 years when we bought it, but that's changed. We like the house too much. We will probably stay here until we have at least one kid, and more likely two. So... since we're not having any kids this year, who knows how long it could last. Things change, and our current 5 year ARM is almost certainly too short a term now. That's my concern with getting another one. But waiting until we're closer to our 5 year term seems foolish with the current rates.

2) Our second mortgage is fully variable. It was a major compromise. Even though the initial rate wasn't <i>too</i> bad, as the fed rate keeps going up, our monthly payment on that has gone from about $220 to $440. Obviously that makes our total monthly payments quite a bit higher. The interest rate that started out fair is now pretty bad (It hit 10% this month). Even though that's the smaller loan, I feel that consolidating our loans at a lower rate may reduce both our overall payments and net paid. This second mortgage (and the fact that it is a HELOC) is a major factor in this.

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