Keep in mind that "no cost" probably means they roll the costs into the
loan. Sure, you don't pay any out-of-pocket expenses but they will get
paid somehow!

I personally am not a big fan of ARMs. When rates are as low as they
are now, why not use them to your advantage. I would go with a 30 year
fixed and not worry about it.

JLP

http://AllThingsFinancial.blogspot.com

In article <1113661160.767746.292700[at]l41g2000cwc.googlegroups.com> ,
"reb[at]hotmail<<0o> > " <recbe[at]aol.com> wrote:

- quote -

That pretty much says it all--it is hard to predict the
future. You don't know the rates or what your plans are.
The best you can do is spreadsheet it, take some reasonable
guesses, and then play what-if to bracket the best case and
worst case.

I suspect that getting the new loan with higher rate up
front is going to add enough extra interest that that you
would be better off keeping what you have if you think
you might move or pay it off in 7 to 10 years. If you
stay long term, the current loan looks better, too. My
gut feel is that the new loan only helps if you are staying
some interval of time from like 9 to 13 years. But you
need to do the math to see if my speculation is right or
wrong.

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ====================

Our bank has just offered us a no cost, close at home, refinance
option. They have offered us a new 30 year 10/1 ARM at 5.75% with a 5%
cap.

We purchased our house in August of 2003 with a 100K 30 year mortgage.
It is a 5 year ARM currently set at 4.875% and will not change until
August of 2008. It has a lifetime cap of 5%, but can increase the
entire 5% the first change. After that, no more than 2% per year until
the 5% cap is reached.

We had planned to pay this mortgage off within the 5 years by selling
off some other assets. Now we may want to hold these a few more years,
and a 10 year "fixed" rate sounds enticing. We are most, certain
we will pay off this mortgage, or sell the house within the next ten
years.

It's hard to calculate the costs, and of course predict the future.
I'd sure like to see what others have to say.