Is it good idea to take 7/6 ARM now? Refinance as soon as rates are lower to 30year fixed.

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Yes obvi

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What are the rates on a 7/6 arm vs 30 yr fixed?

Not worth it

I just evaluated this, it’s a risk decision. You are essentially assuming there’s a high chance (70-80%) that rates will go down AND you’ll refi. If they don’t go down much, you may not end up refi-ing.

You can model out costs and assume you’re getting returns on saved money or plowing it back into principle.

Arm will have a margin and cap rate, you can easily model out worst case scenario. When I did it for a ~$1 mil jumbo, I found that I’m only saving a couple grand a year and even at 7 or 10 years out it’s not a lot. In fact in worst case scenario, you’ll eat through any savings and then some the first year your rate changes (worst case is if it hits cap, which is usually +5%).

To me the upside wasn’t worth the downside, especially if you look at interest rates historically. That said, I just bought the house I don’t plan on moving from for ~20 years, so that’s another factor. If difference In rate was greater I might have done it, it’s just very minimal right now

Thank you for the explanation. This is what I am thinking, we never know what happens in the 7years and if the rates shoot up, it will be a risky situation

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