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Great progress!

the mortgage (approx 464k at 2.94% interest)
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We are in year 3.5 of a 5 year ARM. I would like to refinance once we get the loan out of jumbo territory to get the best rate. The mortgage is roughly 3700 (PIT). We have been paying 5k/month to get to <417k to refinance.


- Is the 3700 actually "PIT" (Principal, Interest and Taxes)? Or something else, like "PI" (Principal and Interest) or "PITI" (Principal, Interest, Taxes and Insurance)? I ask because if you are escrowing for taxes, it's very unusual to not escrow for insurance, too.
- What is the Principal and Interest required payment?
- What are the caps on your ARM? I have typically seen caps of 2% on the first reset and 5% for the life of the loan, so your initial reset would probably max at 4.9%
- If you have been paying $5k/month, you are already snowballing the mortgage with $1300/month, right?

Assuming that the refi will take about 30 days to put in place, at 3.5 years, you have about 1 year 4 months to get your principal balance down by almost $50k in order to not have to refinance at the conventional rate. If you are only paying $1300/month extra, that's probably going to be a challenge.

Unfortunately, it doesn't look like you would have very much extra to throw at the mortgage if you delay paying off the credit cards, assuming that you want to pay the cards off before the rate increases. You said that you can have the total $37k paid off in Sep or Oct (2015?). However, in order to not pay interest on any credit cards, you would have to have all of the cards except for BofA #1 paid off by Sep, 2015 anyway. BofA #1 will have an $8.2k balance in Jan, 2015, and you will have to make 8 more minimum payments, of probably $80 or so, so by Sep, 2015, BofA #1 will have a balance of about $7.6k, which you would have to pay off in another 3 payments in order to not end up paying interest on BofA #1. So, you might be able to throw an extra $10k at the mortgage 4 months early - At a 2.94% interest rate, paying $10 4 months early will reduce your principal by about $100 more than if you were to pay all of the credit cards by Sep/Oct.

Additionally, I have been seeing a lot of talk about the Fed increasing rates by the middle of next year, especially with the strong jobs report that came out last week, and rates already seem pretty much stuck at/above 4% http://www.bankrate.com/funnel/graph/default.aspx?cat=2&... Because of that, I would say that you are looking a refi target date that's sooner than the 16 months or so that you could take.

My suggestion would actually be to look at refinancing within the next 3 - 4 months, or you have a good chance of ending up paying a higher rate than the 0.25% extra that you might pay because you will have to take a jumbo loan. If it's that important to you to not have a jumbo rate, then consider taking money out of your savings to get down to the $417k loan amount.

AJ
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