I'm really hoping this forum can help me figure out a question I've been wrestling with.

I have a mortgage on my primary residence:

Fixed rate @ 3.375%

Balance $340k

Home value $700k

I have a second mortgage on some land:

Adjustable rate @ 4.125%

Balance $105k

Land value $150k

The rate on the ARM is increasing to 5.625% in May, and over its life could increase to over 10%. I knew this up front, of course, but didn't expect such a big jump so soon.

Today I spoke with the servicing company on my first (fixed rate) mortgage about the possibility of doing a cash-out refinance to combine these two loans into one at a fixed rate. They gave me the following options:

1. 15 year @ 3.875% (1 pt) - closing costs $9.3k

2. 30 year @ 4.250% (1.5 pts) - closing costs $11.8k

3. 30 year @3.875% (4 pts) - closing costs $23.7k

I'm hesitant to give up the lower interest rate on the loan that represents 3/4 of my total mortgage debt, but I'm also worried that the ARM will keep increasing and I can't figure out the best way to compare these options. What would you do if you were me?

Thanks so much for any advice!

I have a mortgage on my primary residence:

Fixed rate @ 3.375%

Balance $340k

Home value $700k

I have a second mortgage on some land:

Adjustable rate @ 4.125%

Balance $105k

Land value $150k

The rate on the ARM is increasing to 5.625% in May, and over its life could increase to over 10%. I knew this up front, of course, but didn't expect such a big jump so soon.

Today I spoke with the servicing company on my first (fixed rate) mortgage about the possibility of doing a cash-out refinance to combine these two loans into one at a fixed rate. They gave me the following options:

1. 15 year @ 3.875% (1 pt) - closing costs $9.3k

2. 30 year @ 4.250% (1.5 pts) - closing costs $11.8k

3. 30 year @3.875% (4 pts) - closing costs $23.7k

I'm hesitant to give up the lower interest rate on the loan that represents 3/4 of my total mortgage debt, but I'm also worried that the ARM will keep increasing and I can't figure out the best way to compare these options. What would you do if you were me?

Thanks so much for any advice!

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