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Refinancing Your Mortgage: ARM to Fixed

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To take the decision to refinance a mortgage is just a simple comparison of costs versus savings, but that is only if you’ll replace an old fixed-rate loan with a new one.But a big “if” comes here.

A huge number of homeowners want to get out of adjustable-rate loans, and for them to tally the savings is trickier.

mortgage ARM

If in a month you save $200 from a new fixed-rate mortgage and closing costs were $4,000, then the savings would take 20 months to offset the costs. You would really save $200 in a month by refinancing, after that breakeven point.

Those homeowners who have adjustable-rate mortgages can’t pinpoint the monthly savings over the long term because they don’t know what their payments will be years down the road.

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