What is the index and margin on your existing loan when it re-sets ? What is the maximum rate this loan could go to ?
It is likely capped at the initial rate plus 5%. A max rate of 9.x% isn’t that bad. Consider that you have a couple hundred K that you earn interest at market rates. You have a loan that eventually when the fixed period ends is an adjustable loan that adjusts with market rates, but is capped.
I suppose you could re-fi at a fixed rate of around 6.25% and your Debt-to-income ratio would be something like 10%.
10% of your income for your mortgage ? That’s the equivalent of a car payment for some folks.
Since you have 200K saved up and make 150K per year, this loan is relatively small potatoes. I wouldn’t get too hung up on it. You can take some interest rate risk here.
If I were in your shoes I would enjoy my ultra cheap payment for another year and then consider refinancing when you are within 6 months of reset. Who knows, maybe your reset rate will be lower than today’s fixed rates.
