Forum Archive: Posts by: fauxvic

Here’s a query for all the monday morning quarterbacks out there. In light of the recent exciting news of the recession being over and house prices jumping back up (it must be true, I heard it on Bloomberg Radio AND NPR), we’re wondering if we should refinance or not. Timeline is now(ish), like in the next 8-12 weeks. The house is a 2-family used as 1 in Victorian Flatbush and we’re about 80% complete on a renovation, mostly finish work and appliances remain. We are strongly considering moving to a new home within the next 5 years but right now, we need a few bucks to finish our renovation. Value of the house is ~$1m and if we were to suck out a bit of cash with the re-fi, we’d be looking at a re-fi amount of ~$485k. Credit is good, income is fine and completely verifiable so our situation is not subprime in the least. Current mortgage is a 30 yr fixed at 5.8%. Because we’re seriously looking at moving in the next 5 years, we’re wondering if it makes any sense to go for a 5/1 interest only ARM. From what I’m reading, the inflation rate is expected to remain low for the next few months but then it’s likely to jump so in theory mortgage rates will follow that pattern thusly making this a good time to shoot for a low payment mortgage.

What are we not considering here? We are accepting of the risk that we won’t be able to sell the house for its value before the expiration date runs out on this utopian dream of low payments and cash in pocket. However, barring any catastrophic economic events, how stupid are we to buck the accepted wisdom of long-term mortgage and move to a short term deal? And as a bonus, do any of you wish to hazard a guess about what’s going to happen to interest rates in the next 8-12 weeks or even the next 3-6 months?

All constructive opinions encouraged. Thanks in advance.