Friday Q&A: Refinance or Get a New ARM?

But when rates are way, way down, like they are today, that can mean lower ARM interest rates, just as we’re seeing right now. That seems to be what happened to you.

As far as rolling the dice, just merge your loan-term goals with your risk comfort levels. If you want to stay in the house for a long time, refinancing now will get you a lower long-term rate than with an ARM (assuming interest rates rise, as they historically have done). There’s no telling what the economy will do, and any shift toward higher inflation will likely lead to higher mortgage rates across the board.

But if you’re planning on moving within a few years, go ahead and roll the dice. You’re already locked in for a low ARM rate for the next year, and if the rate does rise substantially, it could mean the economy is getting better and you’ll have an easier time selling your house.

Right now, ARM rates definitely fall in the “strange, but true” category. Enjoy this while it lasts, but plan accordingly that it won’t.

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