I wouldn't say that it should be, but if it was a goal I was really committed to, and I wasn't concerned about my ability to make the payments, I'd get a 10 year fixed mortgage for 2.5%. Assuming $2500 in closing costs, and you applied the $7000 towards the house, that would leave ~$101,500 financed, and it would take you 78.6 monthly payments of $1400 P&I to payoff, for a total of $110,151 in payments. With a refi to a 7/1 arm at 3%, it would take you 80.1 $1400 payments for a total of $112,127. Keeping the 5.1% mortgage on $99,000 of principal, it would take 84.3 monthly payments for a total of $117,995, so even in that scenario, you're about $5800 ahead after 7 years with the 7/1 arm refi vs. keeping your current mortgage. Should you decide to do something wild and crazy like make the minimum payments on the mortgage instead and invest the difference, the savings with the refi would be larger (assuming your investments outperformed the debt, less the tax benefit). With the ARM, I'd be sure to prepay enough principal that I could afford the payment if the rates were to reset to their max (unlikely, but you never know).