If you plan on moving out of your existing home within the next few years, it may not be beneficial for you to refinance. Make sure you let your mortgage specialist know your future plans.
If you do not plan on staying in the house very long, refinancing may not be in your best interests.
If you are refinancing from one ARM to another, check the initial rate and the fully-indexed rate. Also ask about the rate adjustments you might face over the term of the loan.
If you know that you will be moving in 3 to 5 years, you might want to consider refinancing to a 3 or 5 year ARM (adjustable rate mortgage). These loans typically have a much lower rate that a traditional fixed rate loan such as a 30 year fixed, but they do have a fixed rate for the first 3 or 5 years of the loan. This will enable you to benefit from the lower rate, but you won't ever have to worry about the risk of a rate adjustment because you will be selling the home before the fixed-rate period ends.
The majority of your mortgage payment goes toward paying interest. To save an astounding amount of money over the long term, choose a mortgage loan with a lower rate and a shorter payback term. A 15-year mortgage may be just what the financial planner ordered. This type of loan carries a larger monthly payment; but if your budget can withstand the jolt, you can save big bucks over the long haul.
