Cut off that ARM ASAP!

DEAR HARRY: We have had an adjustable-rate mortgage (ARM) for the last seven years. It has been very good for us. Our home is worth about $260,000 with a mortgage balance of $190,000.

My wife has been urging me to get it refinanced at today's very low rates. Our credit score is near the top rung of the ladder. What do you think of doing it now?

WHAT HARRY SAYS: In three words: Do it now! Sure, rates have moved off their historical lows, but they are still near enough to the bottom to be great for the future.

There is one little caveat if you intend to move within the next five years: You may not be able to recover the costs of refinancing in a short period, so bring up that calculator on your computer and compare.

You are likely to get the lowest origination rates from your present lender. The people there know your history with the present loan, and they're more likely (but not necessarily) to give you the best deal.

The fact that your equity in the home is more than 20 percent is another point in your favor. It is possible also that a 15- or 20-year deal might give you a payment that's close enough to what you're paying now that you should consider them.

Incidentally, I've never been keen on ARMs except in situations that are for a very short term.


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