1. Rate cap of 2% every year (as Incarmelvalley mentioned) is misleading. Most options ARMs have 5% cap at FIRST DATE OF CHANGE. meaning, your rate will go up to max of 9.3% at end of fixed term based on current Prime rate index.
2. My current house has appraised to original purchase price.
3. Worked out all the numbers, really put in lots of scenarios. It makes sense for our situation to fix the monthly payments as soon as possible.
4. We have paid down the HELOC and have the capacity to pay it off fully immediately before refi. So, essentially will only refi the first loan. No cash out business.
5. Shopped around for rates, 30-year fixed. Got
-6.125%, no closing costs, no prepayment penalties thro a mortgage broker, contingent on 20% equity after appraisal, know nothing about lender, mortgage might change hands after closing. (have locked this rate)
-6.25%, no closing costs, no prepayment penalties thro our current Mort Lender. (bargained with them after locking lower rate)
Questions:
1. What else should I look out for when refinancing?
2. Can I get better rates then above for 30-year fixed?
3. Is it imperative that the lender be very well-known? Is it enough that I know the terms of the loan very well and not care about who holds my mortgage?
