Had to choose between a fixed rate and an ARM on my refi last month

I was staring at a 6.8% fixed 30 year or a 5.2% 5/1 ARM when I did my cash out refi in Austin. I went with the ARM cause I figured I'd sell or refi again before the adjustment hits in 5 years. Guy at the bank kept pushing the fixed rate saying rates might stay high for a while. First two months have been fine, payment is about $230 lower than the fixed would've been. But I keep checking mortgage news every week wondering if I made a dumb move. Anyone else gamble on an ARM lately and regret it or feel good about it?

2 comments

2 Comments

joelp817d ago

ARM felt risky to me too but you locked in lower payments today, that's a win in my book.

spencer_chen67d ago

My buddy took an ARM on his place back in 2020 and it worked out fine for him because he refinanced before the rate jumped. The key is to have a plan for when that rate is set to adjust, not just cross your fingers and hope. Make sure you know exactly when the first adjustment hits and have a rough idea where rates could go by then. If you can handle a worst case scenario where the payment goes up a few hundred bucks, you'll probably come out ahead overall. Just don't let the lower payment trick you into stretching your budget too thin.