Adjustable Rate Refinance

Refinance This

Mortgage refinancing is the process of moving your repayment obligation from one loan to another. This can mean a change between lenders, but it doesn't necessarily have to be. What a refinance does necessarily have to be is financially sound and sensical:

a refinance must make your mortgages more financially viable to yoru personal needs
the rates attached to your new home loan should be lower than what you are currently paying
the overall effect of any good refinancing opportunity will be savings - either in the immediate short term or in the long haul over the course of your term.

When you do decide to switch that mortgage from one specific loan to another, you will have a choice to make - will your new loan have a fixed rate or an adjustable one?

The benefits of an adjustable rate refinance - less is more

If you are considering a refinance because your current monthly payments are simply too high to bear, moving into a new ARM might be just the thing you need to keep your home. ARMs are incredible flexible and affordable home loans at the get go, and when you refinance into a new ARM you'll enjoy the benefits of an initial fixed rate term at today's low national interest rates. Theoretically, you could refinance every three years into a new 3/1 ARM and enjoy the low initial rates for that fixed-rate term before refinancing on, but this strategy carries two main problems:

every time you refinance you have to pay refinancing fees - both to the new lender providing your new loan and the only lender for any prepayment fees
your rates will still adjust to current levels, and your rates will continue to increase

Refinancing too often is a blaring sign to most lenders that you are not a good candidate for their loans. Pick your refinancing carefully, and never do it unless you feel absolutely certain you can save money with another loan.

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