'Mellody's Math': Seize Chance to Refinance

A N S W E R: Thirty-year fixed mortages are the most common mortgages people choose to refinance. However, families or individuals who know they'll be moving in the near term should consider an adjustable rate mortgage because those rates are lower and will ultimately save money. If you're certain you're moving within a few years and you choose an adjustable rate mortgage, or ARM, make sure you give yourself an extra cushion and go with a 7-year ARM. It's not a material difference over time and the moving process tends to take longer than expected as you wait on construction and other details.

For those who can see the light at the end of the tunnel, it's best to stay where you are. If you are in the last few years of paying off your mortgage, refinancing is not for you.

Mellody Hobson, president of Ariel Capital Management in Chicago, is GoodMorning America's personal finance expert. Click here to visit her Web site, Ariel Mutual Funds.com. Ariel Associate Matthew Yale contributed to this report.

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