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Personal finance observation, musing and decisions in a journey toward financial independence by 36 with at least $1 million.

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Should You Refinance Your ARM or Not?





WSJ's Real Estate Journal explores whether one should refinance an outstanding ARM loan to a fixed rate mortgage. What do you think?

From WSJ:

Now home prices have stabilized, while rising interest rates are causing sticker shock. In fact, the non-partisan Center for Responsible Lending says 97.5% of borrowers who have teaser rates expiring on loans this year could face "payment shocks" of at least 25%, while three-quarters could face increases of 50% or more.

Incomes can't possibly keep up with these bump-ups. According to recent government statistics, real median household income has remained almost flat -- rising only 1.1% last year, to $46,326, from the year before.

So refinancing at a fixed-rate makes a great deal of sense. (I'm assuming that you qualify for such a loan.) Even though mortgage interest rates are higher than they were last year, they're still pretty low by historic standards.

What do you think of this post? Be the first to share your opinions.

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