My wife & I want to refinance our current Mortgage. However we are looking to build a new home in the next year/two.

Question

current rate is 4.875% looking to possibly do a 5 year AR

Answer 1

Hi Damon, and thanks for writing.

The shorter your time-frame, the more freedom you have regarding mortgage choices. A 3/1 or 5/1 mortgage can save you money if you pay it off before it converts from its fixed-rate period to its adjustable phase. However, even then, you have some protections in the form of caps that prevent the lender from raising your rate and payment beyond a specified threshold.

Get some quotes right now from competing lenders for these programs and see how much savings you caould realize during the next two years. I recommend that you choose a loan with fewer upfront costs over one with a lower rate but higher costs, considering the fact that you probably won't have the loan for that long.

https://themortgagereports.com/ratequote

Answer 2

I think you should go over your net tangible benefit with your loan officer. There are closing costs associated with all refinances. Need to find what they are and when the break even point is. A lender can cover closing costs in lieu of higher rate. There are a few moving parts to your case scenario. Consulting with a loan officer will not cost you a dime. Key is how long will you remain at your current home. If its a year or two, it may not be worth it depending on the rate and closing costs.

Gustan Cho NMLS 873293
The Gustan Cho Team at USA MORTGAGE
www.gustancho.com