Refinance Choice - advice

[LivingAlmostLarge]

I started a refi with BofA last week. This week I got a fedex offer from Chase Bank where we currently have a mortgage.

Currently we have 7 year ARM at 3%, we are 3 years in expiring 6/2024.

Offered 7 year ARM at BofA at 2.75% - we already paid $1100 appraisal, $2000 more for refinance

Offered by Chase free relock 2.875% for 27 years fixed rate

What should I do? Just take the new fixed rate lock? I called Chase before i began the refinance and asked for a lower rate. They refused at that time. Thoughts? Need to make a decision asap please weigh in on what I am not looking at.

The plan initially had been to move in 12-18 months. But we are now staying put for 30 months until March 2023 potentially March 2024. DH is taking a new job in March 2021 at a substantially salary cut so we are planning on sitting on this house until we know if he'll either make more again or the startup makes it. We are very grateful to be in our place and happy we didn't overbuy and are able to make it work out. It is not an ideal home we'd like an extra bedroom/office and bathroom for kids away. Also we'd love a 3 garage bay. But these are "wants" not needs and we have everything we "need" in this house.

[disneysteve]

Why are you considering an ARM? It is highly unlikely that rates will be this low in 7 years. Personally, I'd go for the fixed rate at today's historically low rates.

[LivingAlmostLarge]

7 years always seems far away and we never really planned on staying longer and the lower rates except now have always allowed us to pay down more. Plus the arm usually makes us reevaluate the situation and then makes us decide whether we could pay it off. We are getting very close to being able to pay off the mortgage i think. I believe we are are more then 50% of it in cash in our pockets from taxable accounts. 5 more years for sure and we'd have the cash to pay it down.

[riverwed070707]

I'd call BoA and see if they'd match chase's offer. If you switch and refi to chase and have additional closing costs, you won't even recoup the interest savings during the time you live in the home. If you planned to stay in the home long term, I'd definitely advise against the ARM - as DS mentioned, highly unlikely rates will be this low in 7 years

[LivingAlmostLarge]

No chase is where we have current mortgage and they are just lowering the rate from 3% to 2.875% from 7/1 arm to 27 year fixed free of cost. Its in the letter. No fees except the appraisal I paid b of a. I called B of A and they won't match the rate which would bring the rate down to 2.625%. I have 2.75% but i have to move money over to do it. Which I've already done.

[bjl584]

If you are going to move in a few years, and if you will have the cash to pay it off sooner rather than later, then why refi at all?
Seems like an unnecessary expense for not much long term gain

[LivingAlmostLarge]

just locking in an extra 7 years and it was .25% rate reduction for $3300. We were just being cautious. Less than a month ago we had no idea we'd be staying put for another 3 years. In june 2020 we had already decided we were going to move next Fall 2021. August 2020 = decided we need to wait till August 2023 at least. We don't have the income to support moving. Unsure what our income will be then.

[scfr]

I'd ask Chase their fixed free relock rate for 25-yr, 20-yr, or 15-yr. Would lean toward sticking with Chase and going with a fixed but maybe go for a shorter term to push the rate even lower.

[ua_guy]

An ARM would make sense if the rate is such that there's real savings over 7 years AND you intend to pay off the house in 7 years.

Now might be a great time to refinance if later means your spouse may not have the income/job to qualify for a refinance.

Side note...I'm astounded by appraisal fees. Absolutely ridiculous...another money grab.

[LivingAlmostLarge]

An ARM would make sense if the rate is such that there's real savings over 7 years AND you intend to pay off the house in 7 years.

Now might be a great time to refinance if later means your spouse may not have the income/job to qualify for a refinance.

Side note...I'm astounded by appraisal fees. Absolutely ridiculous...another money grab.

very much so. I'm leaning to just going with chase and considering sunk cost.