Today’s WSJ/Real Estate Journal.com has a food-for-thought article on some things to consider if you have an adjustable rate mortgage…

More than $2 trillion of adjustable-rate mortgages come up for interest-rate resets in 2006 and 2007, according to Moody’s Economy.com. For homeowners who want to refinance to a fixed-rate loan, the timing couldn’t be worse — the average rate for 30-year fixed rate mortgages is at the highest level since 2003.

WHAT TO DO: If the rate on your ARM is about to move higher and you have no plans to move in the next five to seven years, locking in a fixed-rate mortgage may make sense. To find out how much more you’d pay refinancing to a fixed-rate loan, click here [Bankrate.com].

If you plan to move soon, don’t bother refinancing — it’s likely you wouldn’t recoup your closing costs. For borrowers with hybrid mortgages, which combine a fixed-rate and an adjustable-rate loan, the decision to refinance or wait until the fixed-rate period ends depends on whether it’s likely rates will continue to rise, or whether we’re nearing the end of the current round of rate increases, as some economists predict.

Just a couple of weeks ago I posted some calculations on how the 30-year fixed mortgage has changed between now and the historical low. That ‘timing couldn’t be worse’ line above is a bit misleading. Yes, rates are higher, but if you do your homework you might find (as they point out above) that it might not make sense to refinance if you aren’t going to be able to recoup your closing costs on that loan.

And for the record, the 30-year fixed opened DOWN nearly a 1/4 point this week.

This entry was posted on Wednesday, March 22nd, 2006 at 4:27 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.