Another Refi Question

[winecat]

A few months ago I posted about refinancing my ARM to a fixed rate mortgage.  I finally got my taxes done and rates have dropped so I started looking around. And now I'm not sure if refinancing makes sense but I'm not great math with a lot of variables.  

I found this mortgage calaculator: www.mtgprofessor.com/calculators/Calculator3e.html

It's the only one I found that compared an ARM to a FRM.  I'm not sure if I am inputting the data correctly when it comes to figuring out how the interest rate can change with the ARM under the "Assumptions about future interest rates" section at the bottom.  

My loan is based on the 1 year LIBOR.  The rate is set at 2.25% added to the LIBOR rate but it can't go up or down more than 2% at every adjustment date.  I'm 17 years into my mortgage.  My current interest rate is 4.25%.  The interest rate can never go past 9.875%.  

Under the best case scenario, I mostly break even or sometimes will lose less than a $1k, but it's steady so that is a positive.  Under the worst case scenario, I end up paying a lot more in interest but I don't know if that'll ever happen.  When the economy tanked with the Great Recession, my interest rate dropped and it took a while for it to get above 5%.  LIBOR went down again late last year and my rate went down to 4.25%.  The way things are going, it might stay low for a while.  

I'm also not sure I can refi at the low rates now without adding to my principle.  (I'm below 100K now.)  When I looked a few months ago, the rates were higher for my low amount.  

I realize that this is a risk tolerance situation. I think the odds are low that my interest rate will hit the higher end of range, but I'm not sure. Is there a way to figure it out? Help me math. lol

[njohnson1972]

Do you have any other debts that are you are paying over 3% on? Any home projects you need to do? Debt is so cheap right now that I would consider taking cash out and paying off higher rate debts. I would take a 30yr at 3%. The 30yr is cheap, but you can always pay it down faster.

[winecat]

Aug 3, 2020 10:37:26 GMT -5 njohnson1972 said:

Do you have any other debts that are you are paying over 3% on? Any home projects you need to do? Debt is so cheap right now that I would consider taking cash out and paying off higher rate debts. I would take a 30yr at 3%. The 30yr is cheap, but you can always pay it down faster.

The only debt I have about $4.5k in student loans which are taking forever to pay off because I'm doing income based repayments but the interest rate is 3.375%.  I have about 5 years left of payments left. 

I paid off the last of my debt last year when business was good.  

I do have some home projects that I could/should do.  But it feels good to have paid off half my mortgage though that might not be a good enough reason if there's a smarter financial decision out there.  lol