I got into one of those Pay Option loans about a year ago because the mortgage guy never fully explained things to me. Now I have been paying the full amount of interest on this loan but it has a rate of over 8%. I plan to live in my condo for no longer than 5 more years. I am thinking of getting a 5 year fixed Interest Only loan or a 5 year fixed Principle and Interest Loan. Is this a good idea? I see the FED's cut interest rates yesterday. Can someone tell me when the absolute best time for me to refinance will be? I want to get out of the situation I am in very quickly.

The Fed rate cut will have more effect on short term money (credit cards, auto loans) than it will on long term mortgage loans. It could help control the rising costs of ARM's that are tied to variable rates, at least in the short term. As far as when is the best time to refinance? The same as when is the best time to buy a stock...when it is at it's lowest point. Knowing that point, has always been elusive!

The first thing to ask is how long are you going to hold the property, does the variable rate have a cap, how often could it adjust, and so on. Next you must ask what will it cost to refinance, what will be the fixed rate, what will be the total of payments and interest paid in each scenerio, and what will the total costs add up to. Run the numbers on both plans to see the bottom line. I have heard loan guys advertising "no-fee loans" (they make it up in higher rates and penalties) say it is about 5 years to recapture the costs with their system.

I agree with Dru,

sit down and write down all options that you have and see which makes the most sense financially.

Unfortunately, many people have not been advised correctly before taking on any loans. The majority also take the wrog approach and decide to take out liabilities to purchase more liabilities which almost every time equal financial problems.

See which option will give you the biggest benefit. The last thing you want to do is refinance and end up paying more.

I found a company offering a 5.375 fixed rate for 5 years with no discount points. If I plan on moving in 4-5 years, is this a good deal?

Its definately better then what you have right now. Make sure that the company which offers the loan is a financially solid company and that there are no hidden charges, etc.

Indeed - here in the UK a lot of mortgage companies have moved to advertise lower interest rates, but have really raised their admin fees to compensate. A different way of aggressively chasing customer acquisition by trying to mislead people into the true relative cost of the mortgage.

Is there a season for mortgage loan?

Time when there are lowest rates and best time to get one?

With arm rates and 30 year fixed rate mortgages almost the same, why not get a 30 year?