Hey Pete,
I have a question about refinancing. We closed on our home last May so it’s been a little over a year. The guy who did our loan said we need to think about refinancing because rates are low. We are at 5% (fixed) now. He said there is an FHA 5/1 ARM where we would be at 3.25% for 5 years and after that it could go up or down but only by 1% a year. So it would be 7-8 years until we are back to our current rate. We would save about $120 a month while it’s at 3.25%. I know he’s looking to make a buck (we know him socially) but that’s ok if it worked out for us as well. Any advice? (We are living paycheck to paycheck at the moment if that makes a difference.)
Thanks so much!
Megan
Hi Megan,
Thanks so much for your email. Congrats on your (newish) house 🙂
I would like to strongly urge you to not refinance. An adjustable rate mortgage is a bad idea 95% of the time. And with your current interest rate being at 5%, an ARM would be a bad idea 99.9% of the time.
Don’t get too stressed about living paycheck to paycheck. If you start to panic, then you might make impulsive decisions that result in future trouble. Work on your budget and your spending habits, and you can start to see light at the end of the tunnel in as little as 2 months.
I’m here to help.
Pete
Do you need a question answered? Email me and I will help you.
Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.