Refinancing ARM .. should I pay points/ closing costs.

[Administrator]

Hi We would really appreciate some insights on what would be a wise decision to do for our scenario. We have a 5 year ARM ready to reset in December for a condominium currently valued at 390,000. Balance Loan amount is 250,000 . We took the ARM 5 years ago expecting to move within these 5 years into a bigger Single family home. But we couldn't and we are forced to refinance now. We are not sure how long we will stay in this Condo , probably not more than three years. But it all depends on whether we could afford to buy another home even at that time. Or if we could rent this house out and still move ? That almost makes another ARM tempting ... because we'd like to continue Saving for the next home down payment. But I am trying to convince myself that a Safe bet in this volatile market would be to refinance to a Fixed. Now, we could easily pay off the closing costs and if needed additional 1 or 2 points to lower the Rate of Interest. Will it be better in our scenario to pay points/ closing costs or not ? We lie in the 25% tax bracket , have young growing children, and are in our 30s. The maximum investing we do is in CDs. And the children's college fund is yet to be started. Please Advise.


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