How adjustable-rate mortgages really move
Refinancing before the reset
In brief
Your servicer must notify you before the first rate change, giving time to compare options. Compare the worst case under your caps with what a fixed-rate refinance costs, including closing costs and how long you plan to stay. Refinancing is not automatically better.
Last reviewed against the primary sources listed below.
Steps
- Read the adjustment notice.
- Calculate the capped worst case.
- Get refinance Loan Estimates.
- Compare over your expected stay.
ARM questions
When will I be told my ARM is adjusting?
Your servicer must send notice before the first change.
Should I always refinance before an ARM resets?
Not always; compare costs and the capped worst case.